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Awash in housing, Dublin looks to build office space to lure companies

This article is written by Cory Weinberg, Reporter at San Francisco Business Times.

Lori Taylor, head of economic development for Dublin, drives past one of the city’s two BART stations, pointing out the housing development Avalon Station, which is under construction and soon to deliver 505 units.

Taylor explains that the city is awash with development— but mostly only one kind.

“And this is housing. This is housing, too,” Taylor says, pointing to other sites. “But then there are these other parcels zoned for other things. That’s where I’m spending a lot of my energy. How do we get other things besides housing?”

Those other things are more offices and industrial spaces. Developers have yet to touch three sites near that BART station, zoned for 2 million square feet of office space and owned by the Alameda County Surplus Land Authority. The city hasn’t had new office construction in six years. It’s gotten 3.6 million square feet of new office space in the last two decades — far less than what the city planned for in a 1994 zoning plan.

Housing, meanwhile, has shot past the city’s goals, with nearly 10,000 new housing units built since 1994. The city of about 52,000 people — where the median household income is $112,679 — is the third-fastest-growing city in the state, “but the other two cities were faster because they had prisons,” Taylor pointed out. She said the city expects to have 70,000 residents within a couple decades.

In Taylor’s first year on the job, she’s already seen that residents are fed up with more housing development. Last month, residents approved by a 4-to-1 margin Measure T– a referendum that bars the city from developing on the 1,650-acre Doolan Canyon, which sits between Dublin and Livermore.

“To have a healthy economy, you need to have diversity. You don’t want to put your eggs in one basket,” she said. “Retail is great but they’re not the only kind of jobs we want in our community.”

The Tri-Valley area has struggled to lure more companies away from the Peninsula or San Francisco, although Gap, PG&E, Bank of the West and Clorox have moved some workers there in recent years.

The area – which includes San Ramon, Livermore, Dublin and Pleasanton – had a 15 percent vacancy rate last quarter, according to Colliers International. The area has 5 percent more vacant Class A space now than it did in 2005. That slip comes as cities in the Peninsula and Silicon Valley gain steam.

Jeff Weil, executive vice president at Colliers, said fewer technology companies are looking to put back offices in the East Bay now, instead shipping workers overseas or to other states.

“Silicon Valley, Peninsula and San Francisco workers feel like they need a passport (to the East Bay). It’s like going to a different country,” he said. “The tech folks have Google buses in the Peninsula. I haven’t seen many Google buses in the Tri-Valley.”

At $31.20 per square foot, the city’s average Class A office rents are slightly below the area’s average overall. Dublin’s vacancy was 17 percent, though it recently got a big catch when Ross Stores Inc. relocated its headquarters there this year. The software company CallidusCloud also signed a 75,000-square-foot lease in the city this year and will move soon.

Dublin also has to compete against two major office complexes – Bishop Ranch in San Ramon and Hacienda Office Park in Pleasanton. A place like Bishop Ranch is better suited to provide the stability that companies are looking for, said Alexander Mehran Jr., president and chief operating officer of Sunset Development, which owns the office complex. (That development is still trying to lease the 1 million square feet it refurbished for tech tenants though.)

“It is tough to attract companies to Dublin,” Mehran said. “There are so many different owners with different goals in Dublin and Pleasanton. Many buildings are owned by investors who don’t operate real estate. Most are looking for short-term gains.”

To get investors interested in building new office or industrial buildings in Dublin, Taylor says she needs to show that the city is ready for more workers. It has plenty of selling points, like BART stations on the east and west sides of the narrow city, a spot next to both Interstates 580 and 680. Taylor – who has worked in economic development in cities such as Fremont, San Leandro, Union City and Hayward – said Dublin also has a business-friendly reputation.

Plus, there’s a “fabulous labor pool” that is attracted to the city’s solid schools, Weil said.

But while it has plenty of retailers (and a Whole Foods opening next year), the city lacks a distinct downtown like some of its neighbors or successful San Mateo County cities such as Redwood City. Taylor says that’s because the city wasn’t built around a railway station, like Livermore and Pleasanton are. That fact could also drive potential employers away.

Weil said an office boom could trickle into the Tri-Valley once young techies — who now live in San Francisco — grow up and become their companies’ decision-makers.

“They’ll fall in love and want to settle down. Do they want to spend $2 million on starter homes in San Francisco or go to the suburbs where public schools are wonderful?” he said “They’ll move to the East Bay and then are in a position to decide where the companies go, so the companies will follow.”

“But it may take awhile,” he added.

Cory covers real estate and economic development.

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