Council considers new property manager for Point
Council considers new property manager for Point
The City Council will be considering a pair of key decisions Tuesday with implications for the both the near-term and farther-flung future of Alameda Point.
The council will consider whether to hire a new company to manage and lease all of the city’s property – including Alameda Point – and also, whether to approve a proposed list of evaluation criteria for assessing development proposals for the former Navy base.
City staff will also offer a presentation on the process they would like to use to contract with potential Point developers. The city has come under fire for initiating consideration of development proposals behind closed doors.
Council members are being asked whether to retain PM Realty Group, which has managed the real estate at Alameda Point for 11 years; replace them with California Capital & Investment Group of Oakland; hire both firms to split the contract; or send it out to bid a third time.
In addition overseeing 156 existing leases – and perhaps generating some additional ones – at Alameda Point, the contract would include management and leasing of dozens of tidelands leases, cell towers and a lease on the Alameda Belt Line property. Any firm chosen to manage and lease city property will not be permitted a hand in the redevelopment of the Point.
City staffers sought proposals for potential property management and leasing firms in 2011, but suspended the process when Alameda Point became a finalist to house a second campus for Lawrence Berkeley National Laboratory. The process was restarted this past May, and PM Realty and CCIG emerged as the two finalists for the contract.
City staff asked the companies to work together after a reviewing panel determined that they had complementary strengths – PM Realty had a strong property management background, and CCIG, a strong leasing approach – but CCIG declined; the company has said that if hired, it would retain some of PM realty’s existing property management staff. PM Realty has since brought leasing firm Cushman & Wakefield back to Alameda Point, and has been touting the strength of its Point leasing program to the press.
“The staff report highlights our deep knowledge of and commitment to Alameda Point. It also highlights the impacts of our relentless management and leasing work,” Rick Jones, PM Realty’s senior vice president, was quoted as saying in a statement released in advance of the council vote. “Every day, our team applies 11 years of working knowledge of these complex properties to benefit the people of Alameda, and are confident that the council will want us to continue to do so.”
Prior to issuing the request for proposals from property management and leasing firms, Mayor Beverly Johnson said the city had gotten “a lot of complaints” about PM Realty over the years.
“They’re not very customer friendly,” Johnson said at a December 2010 council meeting. “What might have been the right answer five or six years ago probably isn’t the same firm we’d use today.”
In a report to council, staffers said that PM Realty – which scored highest with panel members who reviewed the proposals – has extensive property management experience and resources and knowledge of Alameda Point, but staff also listed their incumbency there as a weakness. CCIG was credited by staff for its aggressive leasing program, one-stop leasing and property management approach and fresh perspective, but dinged for its limited property management bench.
PM Realty was hired by Alameda Point Community Partners, the Point’s original master developer, to manage leases at the Point in 2002. The commercial real estate firm brought Cushman & Wakefield aboard to help obtain tenants, but that company left because the developer was limiting their ability to ink deals, a staff report to council says.
Houston-based PM Realty, which emerged as the result of a buyout of another firm in 1990, manages 190 million square feet of commercial property all over the country. In addition to offering 4 million square feet of Class A industrial space at Alameda Point, they manage just one other property in the San Francisco Bay Area.
CCIG was selected in 2009 as a master developer for the Oakland Army Base, and the company is responsible for high-profile restoration projects that include Oakland’s Rotunda Building and Fox Theater. SunCal Companies, Alameda Point’s last master developer, had hired the firm to conduct a building-by-building assessment of reuse opportunities in the Point’s historic district.
City staff said they hope to transition Alameda Point from a largely leased property to one that’s more broadly redeveloped, and on Tuesday, they will also ask the council to approve a list of criteria to be used for evaluating development proposals. The list includes consistency with a host of city plans – several of which are now in progress – and items that speak to a developer’s ability to successfully complete sustainable, financially sound developments.
Staff will also discuss their proposed process for negotiating agreements with would-be developers at the Point. They’re proposing to enter into exclusive negotiating agreements with developers interested in purchasing chunks of the base, which would establish a time frame and other terms for negotiating a development deal.
The presentation follows complaints about the council’s consideration of potential deals behind closed doors and a suggestion from one resident that an open call for development proposals be made instead. In a report to council, Alameda Point Chief Operating Officer Jennifer Ott says offering the exclusive ability to negotiate a deal gives a potential developer incentive and the city, time, to determine whether their proposal will succeed. Requests for proposals are more appropriate for smaller developments, she wrote.
“An RFP process on complicated properties at Alameda Point are likely to result in developers over-promising things that they have not evaluated sufficiently during an extensive due diligence and negotiation period in close coordination with city staff,” Ott wrote.
The city offered exclusive negotiating agreements to both Alameda Point Community Partners and SunCal Companies; neither company was able to develop what the city sought. Alameda Point Community Partners dropped the Point project after determining it didn’t pencil out, while SunCal – which sued the city for not extending its exclusive negotiating agreement – made an unsuccessful bid to voters to build three times the number of homes the city is planning for now.
A similar approach was used in negotiating with Catellus to build Alameda Landing. After stalling out during the recession, the project is under construction.