Lorna Fernandes and Douglas Robson - SF Business Times

- January 22, 1998 - The Shorenstein touch is putting downtown Oakland's City Center on the map. When the Shorenstein Co. purchased the six-building complex for $120 million in December 1996, vacancy rates were running at about 30 percent. By the end of 1997 they had been slashed to 8 percent, according to Chris Curtis, who oversees the properties for the privately held real estate company. Top rents, meanwhile, have edged up from about $25 to as high as $30 per square foot.

"We're certainly having our turn at this moment," the senior leasing manager said, referring to the real estate boom that has gripped the rest of the Bay Area, but has been slow in coming to Oakland.

In 1997, the company leased 125,000 square feet, almost half of which came from outside the East Bay.

However, despite Shorenstein's success in luring Oakland-shy companies into the 1.1 million-square-foot City Center, the company has failed to attract the trophy headquarters tenant that would signify Oakland's turnaround as a business location.

No major company has relocated to the city in recent years, and at least one major tenant, database company Informix, decided to vacate its 68,000-square-foot space at one of the Shorenstein buildings.

But apart from that, Shorenstein's strategy has been simple, direct, and so far, effective.

"Our game plan is to enhance the retail, fill up our buildings, and watch that ripple out to other buildings," Curtis said.

City Center is housed on 12 city blocks and bordered by Broadway, 11th and 14th streets and Martin Luther King Way. Shorenstein-controlled buildings include 1111 Broadway, 1300 Clay St., 505 14th St., and a trio of buildings housing retail and office space known as City Square.

Shorenstein's success at City Center has polished up vacancy numbers for the whole of Oakland's Central Business District, local brokers said. The business district, which includes 90 office buildings totaling almost 9 million square feet, was 13 percent vacant in 1996, and dropped to 11 percent in 1997, said Sheldon Crandall, senior vice president for CB Commercial's Oakland office.

Rates for Class A space in the business district were even lower -- 11 percent in 1996 and 9 percent at the end of last year.

"In this business cycle, this is the first time vacancy rates have hit the single digits in downtown Oakland," Crandall said.

City officials and brokers agree that the Shorenstein name is a draw for the downtown Oakland market.

"More San Francisco tenants than ever before are considering downtown Oakland," said Peggy Roth, a Grubb & Ellis office leasing specialist. "With vacancy rates at 1, 2 and 3 percent in San Francisco, the Peninsula and the Silicon Valley, Oakland is becoming a convenient alternative."

And Shorenstein officials, who manage close to 11 million square feet of office space in San Francisco and Oakland, are not hesitating to market their most recent East Bay acquisition to potential tenants who are stunned by the high prices elsewhere.

As part of the City Center package, Shorenstein obtained development rights to five outlying vacant parcels, and has been discussing building options with possible users, Curtis said.

The Shorensteins are also helping city officials market downtown Oakland to potential overseas clients, said Aliza Gallo, assistant director for the Oakland Community and Economic Development Agency.

"They add a level of credibility here," Gallo said.

They have upgraded the buildings and have attracted high-end retailers like Max's Opera Cafe and Noah's Bagels. Just completed signings include Jamba Juice and florist Rossi & Rovetti.

Law firm Aiken, Kramer and Cummings, formerly at a Lake Merritt location, recently leased about 8,700 square feet at the City Center, as did Microtimes, which moved into 7,300 square feet, from Pleasant Hill.

WestEd, a nonprofit educational research, development and service organization, recently signed a lease for 10,693 square feet after considering locations in Sausalito and at Foothill College in Los Altos.

Easy access to BART and buses, coupled with the location's proximity to San Francisco and the rest of the East Bay, made the City Center an ideal location, said Matthew Sullivan, WestEd property manager.

The company is also expected to complete an 18,300-square-foot lease with the University of California's Office of the Treasurer midmonth.

One looming challenge: Filling the 85,000 square feet that the city will vacate later this year when it moves to its new administration building nearby.

"We're ready for that," said Curtis.

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