Port Of Oakland Eyes Industrial Sector After Upgrades

The Port of Oakland's new maritime director is overseeing a lineup of projects that stand to give industrial owners and developers in the East Bay a boost when the coronavirus pandemic is over.

Port of Oakland Maritime Director Bryan Brandes said there are currently several port initiatives, including a new seaport logistics center, expanded cold storage capacity and the addition of large cranes, each of which is slated to finish by year's end.

Appointed in June by Port of Oakland Executive Director Danny Wan, Brandes also gave an update on total cargo volume, which is down about 5% from last year. It's a trend the group said it expects to continue the rest of this year, due in large part to a 25.3% drop in shipments of empty cargo containers back to origin destinations.

The Ports of Long Beach and Los Angeles, Oakland's primary West Coast competition, are also on track to fall year-over-year compared to last year, with Port of Los Angeles Executive Director Gene Seroka saying the economy is in a "very precarious position."

For Brandes and others, the addition of a new logistics facility has the potential to generate even greater interest in warehouse property in and around the Port of Oakland, which Brandes told Bisnow is already "at a premium today." CBRE Senior Vice President Kevin Hatcher said Port of Oakland-proximate industrial properties have average triple-net asking rents of $13.20 to $13.80 per SF per year.

While industry interests have generally supported the port's growth, there has been less enthusiasm for the higher-profile plans of the Oakland A's, which call for a 35,000-seat stadium-anchored, mixed-use project on port-owned land. Scott Taylor, president of GSC Logistics, which is based at the Port of Oakland, said the port's new upgrade "means nothing if a stadium for the Oakland A’s, 3,000 condominiums and commercial development is built in the middle of the port."

"We’ve already had customers say they’re not making long-term plans for Oakland until they know the outcome of the Howard Terminal development, because they’re concerned about congestion at one of the largest ports in the country," Taylor said.

For his part, Brandes said last month he "would not have taken this job” if he thought the A’s planned ballpark would negatively impact maritime operations.

Other groups, too, are supportive of the ballpark idea. West Alameda Business Association Executive Director Linda Asbury said WABA is very supportive of the A's plans. "Physically, West Alameda is about one-and-a-half miles from the proposed site and would be a great economic development tool for the West End," she said. 

The 440K SF logistics facility is being developed by CenterPoint Properties. After it opens later this year, it will likely be used for a large beneficial cargo owner that imports containers and incorporates them into the facility before further transport elsewhere in the region or country. It is the first phase of an anticipated seaport logistics complex, which is expected to encompass nearly 180 acres and help fulfill port growth goals. 

A port spokesperson declined to name potential partners, telling Bisnow only that it is still in ongoing discussions with several parties who are interested in the facility.

Beyond this year's contraction, "the port is planning for growth in the volume of cargo that moves through the Oakland seaport," Brandes said. "That means a demand for warehousing in and around the port is likely to continue and could extend to the Central Valley.”

On the logistics front, the Port of Oakland is also bolstered by an ongoing three-building development by industrial developer giant Prologis. Two of those buildings remain available to be leased, with the third logistics property completing construction now, with all 189K SF still available, according to Hatcher.

“Both the Centerpoint Properties and the Prologis developments, which are on separate sides of the former Oakland Army base, are the premier industrial facilities in the Bay Area in terms of location and functionality," Hatcher said.

"[The port area] has tremendous location advantages both in terms of visibility and logistics," he said. “In terms of making the Port of Oakland a first port of call for import-exporters, for shippers, I think having Class-A, functional product at the port is tremendously important."

A team featuring JLL Managing Directors Jason Ovadia and Greg Matter and Vice President Patrick Metzger are leading leasing efforts at the CenterPoint project, while a Colliers International team led by Executive Vice Presidents Mark Maguire and Greig Lagomarsino are the agents listed for Prologis' three-part project.

In Q2, the average asking rent for industrial space in Oakland was $14.04 per SF per year, according to Colliers International. 

A port spokesperson referred a request for rent pricing to CenterPoint, which didn't respond. JLL declined to comment.  

Hatcher cited other ongoing seaport projects as additional boons to the East Bay industrial sector, including larger vessels accommodated by bigger cranes the port expects to get by the end of this year.

“Having the infrastructure, the cranes to remove those containers, having a deepwater berth where ships can actually come and go at that size, and then the rail and infrastructure to get those containers off and where they need to go, has been a monumental investment by the Port of Oakland," Hatcher said.

Hatcher said the port has seen its largest incoming vessels about double in size from about 10,000 TEUs, or 20-foot equivalent units, over the last decade. After seeing its first 18,000-TEU vessel in 2016, the port is expected to see three 19,000-TEU vessels later this year, according to Brandes.

Brandes said the potential value added by the entire seaport logistics complex, which still requires at least two years of planning before second-phase groundbreaking, is especially high.

“We’re not aware of any other U.S. port that has the land available to duplicate Oakland’s ability to directly connect its transportation and logistics capabilities on port property," he said.