Week of July 24, 2000
  Snapshot from the Field

Oakland's Tech-Centric Influx:
For the Moment, There Is Some There There

"There is no there there," Gertrude Stein once famously observed about Oakland, Calif. Gertrude, though, hasn't eyeballed recent business location patterns (or much else, for that matter).

In downtown Oakland, for example, ground was recently broken on a US$100 million, 20-story office building. The Web portal "Ask Jeeves" has also leased 159,000 sq. ft. (14,310 sq. m.) that spans seven floors in downtown Oakland, moving its operations from nearby Emeryville, Calif. And the facility that will house Ask Jeeves marks the first new private office building that's gone up in Oakland in more than a decade.

The relocation, said Ask Jeeves CEO Rob Wrubel, "was the ideal way to solve a lot of challenges that you face as a fast-growing company. And it's great to be part of an urban revival."

The Coming of the Dot-Coms

Yep, that's what the man said: "urban revival."

Long a sort of poor relation to its more hip, flashy neighbors, Berkeley and San Francisco, Oakland (www.oaklandnet.com) is suddenly a hot real estate market.

That's the good news for the lesser known city by the Bay. The bad news? A lot of Oakland's location action is coming from the ranks of the now beleaguered dot-coms.

Many of those dot-coms badly want to keep their San Francisco Bay roots. For many, though, the problem was San Francisco costs. And that's where Oakland has begun to look awfully good. The city, for example, has drawn a number of startups from San Francisco. Those startups include RedBooth, which is developing an online exchange, and DoubleTwist, a biotech/Internet hybrid that's already broken ground on its Oakland headquarters project, which will convert one of the city's most prominent abandoned buildings in the downtown area.

Other new information-intensive operations in Oakland include Zhone Technologies, a new-generation telecom vendor that's building a four-facility, 300,000-sq.-ft. (27,000-sq.-m.) campus that will house as many as 1,500 employees near Oakland's airport.

Resurgence for Both Oakland, Mayor Brown

That influx of new facilities marks a resurgence for both the city and for its leadership. The major World War II build-up boosted Oakland boomed into a transportation, warehousing and manufacturing hub. But the boom didn't last. Like many other older cities largely populated by minorities, Oakland saw its supernova flame. Residents and capital alike hightailed it to either the suburbs or the Sun Belt. Politicos came and politicos went, all promising renewal, but delivering little. The city kept its reputation for high crime and poor schools. By the mid-1990s, there was truly not much there there. The downtown had only its booming Chinatown, a Sears store and a new government building. In 1998, though, Oakland elected a new mayor: former California Gov. Jerry Brown. Once ridiculed in some corners as "Gov. Moonbeam," Brown had long been largely out of the public eye. In Oakland, though, he's back with a bang. Since Brown took office in the fall of '98, the total number of high-tech facilities in Oakland has increased by 33 percent, from about 300 to more than 400. The vacancy rate in Oakland's CBD has correspondingly plummeted: from 10 percent to about 3 percent. The Oakland Metropolitan Chamber of Commerce has even opened EastBayTech.net (www.eastbaytech.net). Begun in November of 1999, with 15 firms participating, the project now has more than 100 participating companies. Shorenstein marketing executive John Dolby calls Brown "a natural spokesman . . . a credible national figure who gets Oakland on the map." Other observers say Brown has only come along at the right time to reap the benefits of a scenario already set for Oakland's rebound. Such observers, for example, say the area's Net-driven mega-boom was inevitably going to begin to gravitate toward less pricey digs. Lower costs have obviously been a major factor in Oakland's ascendance. For example, some Oakland office rates are only about $36 per sq. ft. annually, only about 30 percent of the cost for comparable space in much of San Francisco, say industry analysts. In addition, Oakland also has available space, they say. And, the estimable Gertrude Stein notwithstanding, the area also has the same pluses that have made other Bay locations hot site selection properties - mutlimodal transportation, the nearby University of California at Berkeley's world-class talent and the area's legendary breezy, sunny weather, for example.

How Long a Boom?

As in any boom, one question looms above it all: How long can it last? The question is even more pressing considering the market's wild spate of easy.com/easy.go. Clearly, some of Oakland's new corporate citizens may not make it in the long run. Supply and demand is also an obvious factor. Even though they're still a comparative bargain, Oakland's rates for first-class space have leapfrogged by 50 percent since early this year. Brown, though, is likely well aware of that. For all the cosmic-cowboy baggage he's attracted over the years, Linda Rondstat's ex-squeeze is no dummy. And maybe we should just let the folks in Oakland enjoy it. For the moment, at least, there is some there there.



©2000 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.