San Francisco Commercial Real Estate News: Expanding Manufacturing Space

How SFMade is expanding San Francisco’s manufacturing space
Source: San Francisco Business Times
Reporter: Annie Sciacca
Date Posted: April 21, 2015

It’s expensive to build office space in San Francisco, but it can be even more challenging to build industrial space, and make it pencil, according to SFMade executive director Kate Sofis.

That’s why SFMade,which works to expand manufacturing in San Francisco, launched a sister nonprofit, PlaceMade a nonprofit real estate development initiative akin to an affordable housing developer.


Similar to affordable manufacturing space developers in other cities, such as Greenpoint Manufacturing out of Brooklyn, PlaceMade is focused on partnering with the city and with private sector developers to create industrial space. It also provides consulting support to developers or architects who need input on how best to design an industrial product suited for manufacturing.

“In this city we haven’t focused on manufacturing in the past as much as other cities have,” Sofis said. While zoning is effective, and there isn’t a ton of encroachment on industrial space from other uses, the urgent need at the moment is simply for more space.

The demand for space has bakers and chocolatiers competing for space with businesses like repair shops, clothing makers and 3D printer manufacturers. Some are bootstrapping their money while others get investment, and the differences in products mean wildly different profit margins. That means bidding wars can knock out those with less cash flow.

“There is a shortage right now; rents are up 30 to 40 percent just in the past two years or so,” David Lai, a principal with Yosemite Investment LLC, told the Business Times in September. That South San Francisco-based company develops and runs industrial space.

The first project to come from PlaceMade is the 56,000-square-foot multi-tenant industrial building that could be the first new manufacturing building in decades. Approved in January, more details on the project are emerging.

SFMade’s “manufacturing foundry” is part of a three-building site at 100 Hooper St. in the Potrero Hill neighborhood. Currently a self-storage facility, SFMade’s building, which is at 150 Hooper, would provide space for food producers, clothing makers and other startup manufacturers in the city.

Designed by Pfau Long Architecture, the building is the first project to take advantage of legislation sponsored by Supervisor Malia Cohen and Mayor Ed Lee that offers developers increased office space in exchange for dedicating a large portion of their buildings to manufacturing space.

The other buildings at 100 Hooper will connect via skybridges, making it a “campus-style” project, said Daniel Murphy of Urban Green Devco, which is developing the site.

In addition to the SFMade building, 100 Hooper will have another 90,000 square-feet of industrial space on the ground floor of the other two buildings, and the remainder — about 290,000 square-feet — will go to offices.

SFMade will own the manufacturing building outright, and it is pouring $20 million into construction costs alone, Sofis said, adding that the number would be much higher if the organization was not partnering with a developer as it is.

Having its own manufacturing space will allow SFMade to further its effort to find space for startup manufacturers and pursue public subsidies, such as new market tax credit, that will allow it to ultimately lower the rent for the manufacturing spaces it rents out, Sofis said.

SFMade will rent out the spaces at a range of about $15 to $22 per square-foot — or less than $2 per month per square-foot. Other industrial spaces with the site’s proximity to downtown San Francisco are trending well above $24 — in some cases, $36 — per month, Sofis said.

The space will also provide around 200 manufacturing jobs, mostly for people in entry-level positions and from lower-income communities. And SFMade will have personnel in the building to provide consulting and resources for manufacturers.

There’s been a flight of light industrial users to other cities with lower costs, Murphy said.

“We haven’t had space to accommodate the growing industrial sector,” he said. “This is a response to those trends.”

While SFMade will continue to help its network of manufacturers find space, PlaceMade’s focus will be on creating permanently affordable industrial space.

Some areas of the city are more ripe for industrial development than others. Areas like the Dogpatch and the northeast portion of the Mission have vibrant manufacturing scene, including Rickshaw Bagworks, Heath Ceramics, and Timbuk2.

The lower Potrero area, where the Hooper buildings are, holds potential, too, Sofis said, as does the Bayview neighborhood. The key is adding density and building vertically on sites that make sense for manufacturing. The Bayview, for example, has spots that could be renovated for better uses or added to. There are a few self-storage facilities that could provide cross-subsidization needed for such projects, Sofis said. In other neighborhoods, office space makes more sense as a partner in developing this kind of space.

Construction on 100 Hooper will likely begin in the second half of this year, Murphy said, and will take about a year to build.

Link to Article: SFMADE