The developer of a mixed-use project near Lake Merritt in Oakland has decided to drop plans for an office component in favor of more residential units.
The property, located at 1510 Webster Street, was initially proposed to house 222 residential units and 10,000 square feet of office. Now the 19-story building will have 236 units and will include 42 units of affordable housing, according to Danny Haber, CEO of oWow and developer of the project.
Employees continuing remote work in the Bay Area was a deciding factor in removing the office space.
“The work-from-home movement, whether permanent or temporary, has caused a revolution on the reality on the ground,” Haber told The Real Deal. “You either need new Class A office space in the best location or niche office space like our 3400 Broadway building in Oakland that has a freight elevator, tall ceilings and serves makers.”
OWow saw a better opportunity to build housing units with the existing planned infrastructure.
“Without either of the former or latter, for the foreseeable future, office will struggle. And we have an opportunity to replace a struggling category with more homes which would enable us to lower the rental prices by having a higher density of homes and the same infrastructure in the building,” Haber said.
Demand for Class A office space in premium locations is backed up by recent data. According to a report by Avison and Young, premium office space in San Francisco accounted for nearly 80 percent of all leasing activity in the first quarter. That pushed direct asking rents for Class A properties above $82 per square foot citywide annually, $1.67 more than the last quarter of 2021. Class B office space has remained flat, at just under $70 per square foot, for the past year.
While the office plans are scrapped, the apartment building will still contain 15,000 square feet of retail space. This will include a rooftop lounge/bar that will be open to the public, as well as a restaurant and coffee shop. Haber said the design is unique to the Bay Area and modeled for buildings in New York City, Miami, and Europe.
High density buildings with modern amenities have been moving ahead with development in the East Bay in recent years. Related California is looking to bring a 380-unit building to San Ramon that stands seven stories high and covers a city block. Grosvenor announced it secured a $90 million construction loan to build a 163-unit building near UC Berkeley.
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Related California gets OK for 380 apartments in San Ramon