Another really interesting and exciting concept for one of the old spaces at Alameda Point is on the agenda at tonight’s City Council meeting. From the staff report:
Alameda Point Redevelopers (APR), an experienced master developer of multi-tenant small industrial and creative “maker” spaces, proposes leasing and developing Building 8 at Alameda Point. Building 8 is an approximately 270,000 square foot (sf), 3-story warehouse building constructed in 1940. The building has been vacant since decommissioning of the Naval Base (Base) in 1997, has no electricity or water and is in need of a complete re-roofing. The multiple stories, size and condition of the building has prevented the City from finding tenants with sufficient resources and experience to make the significant investment to bring the building up to code and make it marketable to potential tenants. APR has a vision for making the building an enterprising, multi-tenant entrepreneurial and creative “maker” space that is comparable to their other projects in the Bay Area.
Here’s the size of the investment they’re considering and the scale of the project:
Like many buildings at Alameda Point, Building 8 is reported to have lead based paint (LBP), asbestos containing material (ACM), fluorescent light fixtures containing suspected PCB-containing ballasts and mercury-containing light tubes. APR anticipates investing up to $20 million in abating these hazards, fixing the roof, installing electricity and water, and delineating the building for occupancy by multiple small-scale “maker” tenants.
APR’s vision is to divide the building into spaces of varying sizes, allowing individual businesses to find a home as a start-up, and then grow to scale in a supportive environment. Potential uses for Building 8 include light manufacturing, work-live spaces, and workshops for artisans, craftspeople, design professionals, administrative / office uses along with accessory uses to support the community including cafes, restaurants, galleries, and ground floor retail accessible from the exterior facades.
As with the other leases there is an option to purchase the building, here are the details:
The APR lease also includes a purchase option with an option price of $10.3 million. Staff believes a purchase option is warranted in this case because of the significant investment needed in the building coupled with the development of additional small, creative spaces, enabling entrepreneurship and creating jobs. …Additionally, APR plans on investing approximately $20 million in Building 8, which is a significant investment that would unlikely be possible without the security of a purchase option. The project is backed by a qualified, single investor ready to rapidly realize the potential of Building 8. The City does not otherwise have the funds to invest this level of improvement into Building 8 without private owners and users that have access to private capital.
City staff and its leasing agent, Cushman & Wakefield, believe that the option price of $10.3 million dollars represents a reasonable market price for Building 8, a multi-story industrial building in poor condition that cannot be occupied without significant upfront investment. Assuming a typical 50 percent building to land coverage ratio, the 90,000 square foot building footprint on the 173,369 square foot parcel results in a coverage ratio of 51.9%. Therefore, we do not believe that there is any additional land area being delivered with the building that should be accounted for in the valuation. The $10.3 million dollar purchase price over the 270,000-square-foot building equates to $38 per square foot, which for an atypical multi-story industrial building in poor condition that cannot be occupied without significant investment is a reasonable market price. Class C single-story manufacturing/warehouse space that can be occupied is estimated at a range of $53 to $70 per square foot (Exhibit 3). It is very difficult to obtain exact comparable sales for multi-story buildings in similar poor building and infrastructure condition as Building 8. It is highly unusual for industrial buildings to be multi-story as industrial buildings are typically single-store buildings. If the purchase price of $10.3 million is spread over just the first-floor square footage of 90,000 square feet since this is the most usable and marketable directly comparable type of industrial space, the price per square foot is approximately $114 per square foot.
These are exactly the kind of projects — along with the others that have been recently approved — that we’re supposed to be waiting for. Hopefully this one gets approved quickly without too much push back.