By Jon Peterson
Looking to capitalize on its knowledge of the East Bay market, one Bay Area development company is poised to make a big move on a project in Oakland. San Francisco-based Ellis Partners in partnership with Boston-based Intercontinental Real Estate Corporation is planning to develop a 24-story 520,000 square foot office complex on the site that the two companies own at 1919 Webster Street in Oakland.
The companies are still in the early stages of planning, but they hope next year will be pivotal in getting approvals completed. “Our current plan is for us to have a full approval for the project sometime during the fourth quarter in late 2022 and then start the development of the property sometime after that,” says Jim Ellis, a managing principal with Ellis Partners.
This real estate investment firm has the benefit of considerable equity on hand to fund the project, which could speed things up for the partnership. “With our current relationship with Intercontinental, we have in place the equity for this new development. This is different from other developers who have to raise the equity capital closer to the start date of their project. When we are ready, we will arrange a typical construction loan for the development that would roughly cover 50 percent of the project cost,” said Ellis.
Once the project gets closer to the time when the development would be started, Ellis plans to re-assess the market and determine if it would rather have the project started on a speculative basis or wait to begin until it has a certain amount of pre-leasing completed. “This is a situation we will analyze before we start the construction of the project. We have begun to have some discussions with potential tenants for the project,” said Ellis.
Ellis and Intercontinental first became involved with the site at 1919 Webster in April of this year. The two investment firms had acquired the existing property for $23.5 million, according to public records. The asset is a vacant, 74,000 square foot building that was once occupied by the electric utility PG&E.
Ellis believes that its new project will be able to offer potential technology tenants very large blocks of space in a market that is starved of large block spaces for office tenants. “Our current view of the Oakland office market is that there are very few, if any, projects that can offer potential tenants space for 200,000 to 400,000 square feet of space in a single location,” said Ellis.
The new project has strong mass transportation connectivity. It is situated two blocks from the 19th Street BART station and less than a mile from the Lake Merritt BART station.
1919 Webster is the second major project in Oakland on which Ellis and Intercontinental have embarked together. The other asset was the office project known as The Key At 12th located at 1100 Broadway. The 18-story, 345,000 square foot property is now fully leased to tenants like the University of California Office of the President and Credit Karma.