So something I’ve really wanted to write about for a while and never got around to is to actual barriers to industrial business attraction in Oakland. I hope that at some point in the future, I will get a chance to write a longer post about this, full of all sorts of links and data and such, but this will have to do for now.
So as we keep being told, the whole idea behind the industrial preservation and the new industrial zoning is to create “certainty.” I don’t have a problem with this, and, as I’ve said before, I don’t have a conceptual problem with the industrial land use policy the city recently adopted, although I think there are some specific areas where the Council made some very bad decisions. I also don’t have a general problem with the new industrial zoning code, although I again have some problems with the details.
Anyway, I want to talk about this mostly because I’m hearing Nancy Nadel say over and over again things like “We’ve just completed industrial zoning, which means we can now begin working on business attraction.”
So when I was working as a market researcher at a commercial real estate brokerage, specifically in industrial real estate, there were two very clear barriers to locating businesses in Oakland, and I can tell you for a fact that the zoning was not one of them. Certain politicians and bureaucrats have really latched onto this claim and just say it over and over and over again until my ears bleed, and nobody ever seems to question them on it. I don’t know who they’re talking to, but this was just not a concern for our clients at all.
What was worrisome to our clients? Two things. The first one is, of course, crime. Our crime problem is an issue for business attraction for two reasons – personnel and material. If people are afraid to come to work where you’re located, your business suffers from a reduced labor pool and won’t be able to attract quality staff. The much, much bigger problem though is materials. When people complain about our crime problems, they mostly talk about violent crime, which is legitimate. But we also have a serious property crime problem, and when being in Oakland means that you’re significantly more likely to get your business broken into and your materials stolen, that’s a really good reason to locate in Emeryville instead. And this is why I want to laugh when I keep hearing about attracting green technology such as solar panel manufacturing to West Oakland. Look – businesses here can’t even keep their copper wire safe – do you honestly think anyone in their right mind is going to put a factory full of silicone in West Oakland? No way. If we’re serious about business attraction, we have to deal with the crime issue, and I think we all know that we aren’t going to accomplish that with the same Council that has been letting things deteriorate for years.
Issue #2? Infrastructure. So despite what Nancy Nadel seems to think, Oakland has some of the lowest average asking rates for industrial space in the entire Bay Area. Mostly, that’s because our property is so undesirable. The crumbling warehouses that exist in much of Oakland’s industrial areas aren’t suitable for most of the type of businesses we want to attract. Nancy Nadel keeps talking about bringing biotech – biotech companies want to locate in fancy new light industrial business parks that have all the nice modern amenities. There are, of course, other kinds of businesses that have fewer needs and could use some of our old warehouses just fine, if only they weren’t falling apart. It is not unusual that the cost of bringing the ancient industrial space in West Oakland into conformity with modern safety codes is greater than building an entirely new building. So the issue isn’t that the rent is too expensive (because the property owner wants to leave their property vacant in homes it will be converted for housing, as some people claim), but that the necessary infrastructure improvements that will make the property usable are too expensive. Nancy Nadel choose to blame property owners for this, saying that they are not paying for the improvements themselves because they’re “greedy.” Any Councilmember who was serious about industrial business attraction would, of course, be looking for ways to work with property owners to deal with the problem instead of deciding that they’re the enemy.
Anyway, if we want industrial business in Oakland, we need to provide appropriate space for them to operate. Sean Sullivan has proposed emulating models of successful downtown redevelopment efforts to create appropriate space in West Oakland. That is, the redevelopment agency could do something like we did with Forest City, identifying a developer willing to build an R&D/light industrial business park and assisting with parcel consolidation and perhaps providing some sort of subsidy for any necessary environmental remediation. The West Oakland redevelopment fund isn’t exactly flush with excess cash, so there are some limits on how much financial assistance we could provide, but we can take advantage of bonding capacity if we have a real shot at getting someone to build actual desirable business space. My understanding is that this is something the Oakland Partnership is hoping to work on, and I do hope we can get something moving relatively soon.