Presentation Title
Second Line
August 15, 2016
1 City of Alameda
Study Session on Upcoming Alameda Point
Leasing and Sale Activity
City Council Meeting
January 16, 2024
Agenda
1. Study Session Purpose
2. Background Materials & Data Review
1. Policy Documents
2. March 2023 Disposition Strategy
3. Current Alameda Point Leasing Profile
4. Findings from Dec 8 Tour and Economic Development Advisory Panel
3. Initial Staff Recommendations
4. Discussion
2 Study Session Purpose
• City intends to lease or sell at
least four buildings in Reuse
Area in next 18 months
• Seeking Council feedback on
priorities for selection and
negotiation process
• Builds on March 2023
Disposition Strategy Special
Study Session
3 Building 41
Building 92
Building 24
Building 11
Properties
for Sale
Properties
for Lease
Study Session Purpose
• Discuss unique aspects of Historic Reuse Area real estate and infrastructure that affect the pool of prospective users – City will discuss other areas and issues at Alameda Point in 2024, including Enterprise District, Residential use potential
• Establish shared understanding of tradeoffs in pursuing different priorities
• Provide up front guidance for staff and brokers to inform selection and negotiation prior to Council review
• Receive early Council direction on priorities, reducing risk to prospective tenants or buyers of negotiating costly legal agreements prior to Council action
4 Background – Development vs. Reuse Areas
• Master Infrastructure Plan: Defines
different implementation approaches
due to site characteristics and
constraints
• Reuse Areas: Building sales will fund
infrastructure
– Nationally Registered Historic District
inhibits significant building demolition
and large-scale new development
– Single buildings / small parcels unable
to support large cost of infrastructure
• Development Areas: Infrastructure
funded by new development
– Economy of scale enables infrastructure
development to be funded by private
developers (e.g. Site A, West Midway
Projects)
5 March 2023 Disposition Strategy
6 SELL
SELL
LEASE
LEASE
SOLD
SOLD SOLD
SOLD
SOLD
March 2023 Disposition Strategy
Goals
• Maximize land value and sale
proceeds by selling adjacent to
new infrastructure
• Retain high-value leasing assets
until operational costs are
reduced - continue leasing of
hangars until adjacent backbone
infrastructure has been
completed
• Maintain flexibility - provide
ability to be nimble,
opportunistic
Disposition Strategy Part II – Priority Uses
• Life Sciences
Businesses innovating in biology,
medicine and agriculture
• Clean Tech, Green Tech, High
Tech
Businesses that research, develop
and/or produce products that enhance
environmental sustainability and
advance technological innovation
• Blue Tech and Maritime
Industrial & commercial maritime
businesses such as ship building &
repair, recreational marinas, “blue
tech” research and development,
engineering, software, and advanced
manufacturing
7 • Retail and Restaurants
Local and experiential retail (dining,
personal services and fitness)
• Tourism and Hospitality
Visitor destinations such as
museums, Spirits Alley, recreational
activities with an emphasis on
waterfront
• Artists and Small
Manufacturers
Artists, “makers”, small
manufacturers drawn to historic
environment and unique buildings.
Emphasis on food and beverage
sector
2018 Economic Development Strategic Plan Priority Sectors:
Alameda Point Businesses Concentrated in Priority Sectors 8 • Concentration of businesses in the City’s priority industry clusters • No life sciences presence in Alameda Point
• Significantly lower job density – focus on large spaces for R&D, manufacturing ~2 million occupied sq. ft.*
~1,700 jobs
1,200 square feet per employee
~7 million occupied sq. ft.*
~23,000 jobs
300 square feet per employee
Clean Tech /
Green Tech /
High Tech
28%
Blue Tech &
Maritime
29%
Artists & Small
Manufacturers
24%
Retail/Service
12%
Insututional
/ Non-Profit
7%
Alameda Point Tenant Mix by Square Feet
(Office, Industrial, Flex Space)
Life Sciences
23%
Clean Tech /
Green Tech / High
Tech
16%
Blue Tech/
Maritime
10%
Artists & Small
Manufacturers
18%
Retail/Service
6%
Insututional /
Non-Profit
11%
Professional
Services
9%
Health Care &
Social Assistance
7%
Citywide Tenant Mix by Square Feet
(Office, Industrial, Flex Space)
* Data excludes retail storefronts and jobs
Alameda Point Leasing Observations
– Profile of Interested Businesses
▪ Life sciences, aerospace, aeronautics, autonomous vehicle research, blue tech, energy
▪ Mostly startups with large VC investments, limited business history (1-5 years) and weaker financials. Some tenant
prospects with moderate to strong financials
– Advantages:
▪ Competitive for R&D space due to large unencumbered floor plates, tall clearances, robust infrastructure
– Disadvantages:
▪ Significant capital investment required to rehabilitate is a major hindrance that limits pool of tenants
▪ City RFP and lease approval process is seen as cumbersome 9 Financial Considerations
• Alameda Point leases should be fair market value unless other policy considerations are prioritized
• Need to maximize potential proceeds from sale of buildings to fund needed infrastructure, parks
• Rents currently in range of $1.00-$2.00/sf/month due to condition and potential uses
• Tenants need to be able to secure up front capital to rehabilitate buildings; City generally includes lease credits to offset costs • Private developers / owners are better able to secure this capital and absorb risk. They lower barriers to entry for tenants. 10 Economic Development Advisory Panel (EDAP) Findings
• EDAP Met on December 13, 2023
• Feedback:
– Acknowledge Alameda Point’s past and incremental success in achieving City Priorities
– City should be nimble and not layer on cumbersome selection and evaluation processes, especially in current weak commercial market
– All else being equal, City should prioritize Economic Development Priority sectors
– Provide clear guidelines and rules up front to reduce risk that deal will not secure Council approval
– Animal testing: understand Council potential desire to limit on public land, but be aware of the message this sends to the Life Science industry
11 Staff Recommendations for Discussion
A. Add Two New Disposition Strategy Priorities:
1. Maximize land value and sale proceeds by selling adjacent to new infrastructure
2. Retain high-value leasing assets until operational costs are reduced - continue leasing of hangars until adjacent backbone infrastructure has been completed
3. Maintain flexibility - provide ability to be nimble, opportunistic
4. Focus on economic development priority sectors – establish up-front use expectations for buildings, prohibit animal testing but encourage other life science
5. Streamline leasing process – competitive RFPs for sales. Favor competitive process for leases, but allow for flexibility/opportunity. Aim for 120-150-day lease approval process, including a maximum 30-day selection process for leases, 60- day selection process for sales, and 90-day review, negotiation and approval. 12 Staff Recommendations for Discussion
B. Use Expectations for 41, 92, 24, 11 are
based on following concepts
(see Exhibit 3 for details):
1. Strive for fair market value leases and
sales
2. Lease credits acceptable to fund
building improvements or offset risk for
highly desirable tenants
3. Support tenants with moderate to high
financial stability
4. Consider the context of the buildings
5. Encourage jobs and discourage
passive uses
6. Disallow animal testing on City-owned
land
13 Aerial View Showing Surrounding Context of Buildings 41, 92, 24, 11 Council Discussion
Staff are seeking feedback on:
• Additional Disposition Strategy Priorities (slide 12) • Use Expectation Concepts (slide 13)
• Detailed expectations in Exhibit 3
14 Thank you
15