Alameda Point Explained: Businesses face uncertain future

Alameda Point Explained: Businesses face uncertain future

Michele Ellson
Alameda Point

Oaktown Jerk’s Randy Hughes feels lucky to have found commercial kitchen space in an old McDonald’s on the former Naval Air Station where he can produce his artisan beef jerky. But the brevity of his lease for the shared kitchen space is cause for unease.

The former McDonald’s sits at the heart of what city leaders hope will be ground zero for a renaissance at Alameda Point; the search for potential developers who could transform a pair of moldering parcels encompassing 150 acres into homes, shops, offices and more began last week, and development work could begin as soon as 2015. The lease that covers Hughes and two other food businesses that share the space expires at the end of this year, and their future is uncertain, he said.

“It is a nice location, and we do feel very lucky to be here. But we are concerned,” Hughes said, adding: “I speak for probably everyone on this base who has a short-term lease.”

A red-hot real estate market coupled with a more aggressive effort to attract new businesses has accelerated interest in the acres of available space at Alameda Point, as has the city’s ownership of much of that space – a change that made it easier to move forward with new leases, said Nanette Mocanu, the city’s acting assistant community development director. And search giant Google’s decision earlier this year to lease an additional 110,000 square feet of hangar space at the Point made attracting businesses to the Point a “new game,” she said.

“We get all kinds of inquiries from people,” Mocanu said. “It’s a hot property right now.”

But Mocanu said the city has been “very clear” that Alameda’s primary goal is to develop the former Navy base, letting newer lessees know their stay there may be short and reducing the impact on existing tenants “as much as possible.”

“We’ve taken a gentle hand with them to say, ‘We’ve gotten the property, and we’ll keep you informed with what we’re doing with development,’” she said.

Mocanu said the city is being “strategic” in its leasing decisions, offering shorter term leases in areas where development is planned to start and longer term leases – some with purchase options – in buildings the city plans to fix up and reuse.

“Those hangars are not going anywhere,” Mocanu said.

Of the 69 commercial Alameda Point leases on a list the city provided to a reporter, two dozen have expired and another 14 will expire by the end of this year. Eleven more businesses are on month-to-month leases, the list shows. All told, existing Point businesses employ about 1,000 people.

Longer-term leases are going to businesses that boost Alamedans’ quality of life, she said – along with its sales tax take and the city’s profile. The city has actively worked to grow a “Spirits Alley” along Monarch Street that’s now home to Rock Wall Wine Company, Faction Brewing, St. George Spirits and Proximo Spirits, the distiller that purchased Hangar One Vodka from St. George. Bladium Sports & Fitness Club, one of the oldest businesses on the base, has a purchase option in its lease; Google’s lease also contains a purchase option.

The city is also trying to find a new home for a collection of “makers” who have set up shop “smack dab in the middle” of the city’s planned town center development, Mocanu said.

“The city fully intends to have the developer work with them to find like space in the town center development,” she said. “That’s a tenant we think would be ideal in the long term blend of Alameda Point.”

But Mocanu acknowledged that she’s had some tough conversations with businesses the city doesn’t see fitting into the Point’s future, like an unnamed storage company on a month-to-month lease in an area the city hopes will become home to a corporate campus or “major sales tax generator.”

“What we’ve told them is, ‘We’ll keep you informed, but you’re probably not in the long-term tenant mix for Alameda Point.’ We have kind of had to deliver some of the hard messages to people,” she said.

None of the half dozen other Point businesses contacted by The Alamedan about their leases responded to a reporter’s request for comment.

In response to a question posed on The Alamedan by Hughes’ wife, Julie, about the city’s plans to relocate existing Point businesses, City Manager John Russo said the city hopes to “grow and keep” as many of the Point’s existing businesses as possible but that some may be impacted by its development plans.

“The city will work with businesses and developers to prepare fair phasing and relocation plans for any business affected by new development,” Russo wrote.

Some of those businesses may have a difficult time finding new places to set up shop. The Point offers large warehouse spaces and specialized facilities that are difficult to come by elsewhere. The building that houses bus painters Complete Coach Works, for example, is a former airplane hangar that was specially designed to cut paint and solvent emissions.

Hughes said he moved to Alameda Point in 2013, after losing his lease on the Oakland kitchen space where he started his business. Finding existing – and affordable – commercial kitchen space is difficult, he said; getting a new space ready could take up to a year.

Hughes said he’s hopeful that whoever is selected to initiate development at the Point will decide that a commercial kitchen is an “essential part” of the growing local economy and that providing affordable space for local companies is a viable business plan.

He’s also hopeful that city leaders – who were advised by a consultant that they should seek out food and beverage businesses to build up the base – will consider the high stakes for businesses like his. He and the other businesses leasing the Point space are working to brand their companies, and they’ve invested $30,000 in upgrades – a big investment for small businesses.

“When they have these City Council meetings – someone needs to let them know that livelihoods are at stake,” Hughes said. “There are a lot of people who call this place home and could conceivably be displaced, depending on how much of the base they renovate.”

Hughes and his family live in Alameda, and he’d like to keep his business on the Island, he said.

“I’d like to stay here on the base and give my tax dollars to the city that I live in,” he said.

Comments

Submitted by luczai (not verified) on Fri, May 9, 2014

I would advise concerned tenants to attend any and every City meeting that relates to the future of Alameda Point. You can get people to listen to you when things are in the planning stage, but once the decisions have been made, it's too late to do anything about it. I've been at meetings where public input was solicited and nobody showed up to comment. That's how things go through that people later question: "How did they let THAT happen?" I'll tell you how, YOU did nothing to prevent it.