California Stem Cell Agency Moving This Month to Oakland, Pushed Out of San Francisco by High Rents

By the beginning of next month, California’s $3 billion stem cell research effort expects to be safely ensconced in its new headquarters in Oakland, once the stomping grounds of author Jack London and actor Tom Hanks and still the home of California Gov. Jerry Brown.

Building housing new HQ of CIRM

The move will cost about $1.8 million, according to the agency, which says it will save money over the long term compared to staying in San Francisco, across the bay from Oakland.  The cost of office space in San Francisco is soaring, fueled by tech firms awash in cash.

The California Institute for Regenerative Medicine (CIRM), as the agency is formally known, has enjoyed a rent-free, 10-year stay in what is now a sizzling real estate location in San Francisco. The agency’s offices were provided as part of an $18 million package offered by San Francisco, which was competing with other cities in California.

Maria Bonneville, CIRM’s director of administration, said in an email last month to the California Stem Cell Report,

“Given the cost of remaining at our current location, we had no choice but to move.” 

(The full text of her email is here.)

Figures in Bonneville’s email show that the move will cost an estimated $1.8 million, including $828,300 in tenant improvements. The landlord will pay an additional $891,520 for the improvements, which will total about $1.7 million. The next largest expense in the move, scheduled for the Friday after Thanksgiving, is $371,043 worth of new furniture.

Bonneville said the existing furniture, again donated, is 10 years old, not ergonomic and will not fit in the new space, which totals 17,000 square feet instead of the current 19,500. 

Some CIRM staffers will be losing their offices. The new space is slated for only 12 private offices compared to 39 at the current location.

Bonneville said,

“Although CIRM will incur some one-time costs as a result of its relocation, we believe that the space is better designed to facilitate the CIRM team’s execution of CIRM 2.0 and beyond, and CIRM will realize more than $2 million in savings over the course of the lease compared to the costs of remaining in its current space.”

She said,

 “Indeed, even at $75 per square foot for our current space, in the first year alone, CIRM will save approximately $1 million in rent ($501,569 in Oakland compared to approximately $1.5 million (19,500 sq. ft. x $75).

Bonneville elaborated,

“Over the next five years and four months, CIRM would pay approximately $8 million to remain in its current office space.  The costs for rent in Oakland will be approximately $3.975 million (assuming CIRM occupies the entire premises, including the 15th floor, for the full term).  Thus, even with CIRM bearing some of the costs of tenant improvements and other one-time relocation expenses, CIRM will realize substantial savings from the move and it will occupy space that is better designed to achieve the agency’s mission.” 

The agency has space on two floors of a building at 1999 Harrison Street with the lease on the 15th floor running three years and five years on the 16th. The agency is currently projected to run out of funds for new awards in 2020 and may see its current budgeted staff of about 55 shrink as that year approaches.

Capturing the headquarters of California’s world-renown stem cell agency is a nice score for Oakland. It has long been a poor cousin to San Francisco, lacking the glitter and romance of the city that was once known as Baghdad-by-the-Bay. No one sang about “losing their heart" in Oakland, as Tony Bennett has famously done about San Francisco.

Oakland, 1901. CIRM's  new HQ is on Lake Merritt, shown
at the lower left of  the map. 

But Oakland has its share of stories, famous personages and interesting history. Huey Newton, a co-founder of the Black Panthers, grew up in the city, along with Ed Meese, former U.S. attorney general and close advisor to former President Reagan. Clint Eastwood had his roots in Oakland in addition to Tom Hanks. Jerry Brown was mayor of Oakland for eight years. He still has his voting residence in that city.  

The site of CIRM’s new offices on Lake Merritt was once an important location for the Huchin tribe, which lived there for thousands of years.  Rocky Road ice cream was created in Oakland in 1929.  During World War II, the city was an important shipbuilding and food processing hub. The mai tai cocktail was first concocted in Oakland in 1944, according to Wikipedia. Misconduct by the Oakland police department led the city to pay $57 million from 2001 to 2011 to alleged victims, the largest sum of any city in California, according to local television station KTVU.  

Today the city is the home of Golden State Warriors, the National Basketball Association champions, who have played there since 1971, eschewing, however, the designation of “Oakland Warriors.” The Warriors are scheduled to leave Oakland in 2018, taking up residence in a $1 billion, combined basketball palace/commercial development, ironically only a short distance from the current offices of the stem cell agency. Some UC San Francisco scientists and others oppose the development because they fear it will push out biomedical enterprises now in the area and deter others.

 

As for Jack London, a section of Oakland bears his name.  As a boy, Jack London “studied” there in a saloon called the “First and Last Chance,” according to legend, and drank there, presumably when he was a little older.

The stem cell agency had its first chance in San Francisco to develop a commercial stem cell therapy. Now, its last chance may be in Oakland, only about a 30 minute walk from Jack London's waterfront watering hole.

Headquarters Move by California Stem Cell Agency 'Disappointing' to San Francisco

The San Francisco Chronicle today picked up the story about how “a simple state agency” is moving its $3 billion operation east from San Francisco across the Bay to Oakland.

The newspaper carried the article by Victoria Colliver on its front page, one of the few times that news about the state stem cell agency has made such a splash in its hometown paper during the last 10 years. The story followed yesterday's piece on the California Stem Cell Report, which carried the first published details about the move.

Most of what the Chronicle reported was familiar to our readers but Colliver also had this from Kevin McCormack, senior director for communications for the agency.

“The lease is up now, and this is now one of the hardest real estate markets in the country. We’re a simple state agency, and we don’t have that kind of money. ... San Francisco is just unaffordable to us.”

McCormack said it would have cost the agency $1.5 million to pay for the equivalent space (20,000 square feet) that it now has in San Francisco. Instead, it found a home in Oakland with 17,000 square feet for $697,560 a year.  The agency has about 55 employees.

Colliver’s story began by saying that the stem cell agency is “the latest victim of San Francisco’s ski-high rents.”

The Chronicle quoted Todd Rufo, head of economic development for San Francisco, as saying, “…(W)e’re disappointed to see them go….”

No coverage has yet surfaced in Oakland area media outlets, according to a Google search this morning.

California Stem Cell Agency Saying So Long to San Francisco

The new HQ location for the California stem cell agency

The city of Oakland does not have the same snap and sizzle as San Francisco, but it will soon have something that the famed city-by-the-bay will not have – the headquarters of an internationally known, $3 billion, stem cell research agency.

California’s taxpayer-financed program, which is arguably the largest, single source of stem cell research funding in the world, is leaving San Francisco this fall and moving across the bay to the sunnier and cheaper climes of Oakland.

The reason is that the agency is no longer the beneficiary of free space in San Francisco and can’t afford to pay sky-high rent to stay there.

Red bubble shows location of new CIRM HQ -- Google map

The new address for the California Institute for Regenerative Medicine (CIRM), as the agency is formally known, will be 1999 Harrison St. in Oakland.  CIRM will be housed on the 15th and 16th floors of a granite-clad building overlooking Lake Merritt in the downtown area.

In San Francisco, the agency’s neighbors included Happy Donuts, which also sold Louisiana fried chicken, and the San Francisco Giants baseball park.  In Oakland, its neighbors will include the FBI and Cerexa, Inc., a biotech firm owned by Forest Laboratories of New York. If CIRM workers are missing Happy Donuts fare, Oakland's famous Chicken&Waffles restaurant is only 15 minutes away on the bus.

The stem cell agency enjoyed its rent free location as the result of a bidding war in 2005 among cities in California to acquire the agency headquarters. San Francisco offered a package that it calculated at $18­­­­­­­ million. It also helped San Francisco that Bob Klein, the first chairman of the agency, lived on the San Francisco peninsula.

The agency and its auditor estimate that CIRM saved $12 million in rent and related benefits during the 10 years it has been in San Francisco. That money, however, will ultimately be spent on research or agency expenses.

That includes the rent for the new digs that will run $697,560 annually. The base rate for the 17,097 square feet is $3.40 a foot. The agency will have 14,411 square feet on the 16th floor of the 27-story building and 2,686 on the 15th. 

In response to a query, Kevin McCormack, CIRM’s senior director for communications, said,

“The term for the 16th floor is five years; the term on the 15th floor is three years, with an option to extend by two years to be coterminous with the term on the 16th floor.  This will provide CIRM with the flexibility to reduce its space and rent burden, depending upon the circumstances.”

The agency is expected to run out of cash for new awards in less than five years but will have ongoing functions related to its existing awards.

Costs for tenant improvements are still being calculated along with costs for the move.

Under the San Francisco lease, the owner provided free parking, a significant benefit for the agency employees, which number about 55.  Parking can run to $15 to $20 a day in the agency's current neighborhood, according to sanfrancisco.bestparking.com.

In Oakland, employees will have to pay for their own parking, but the agency is looking into government assistance programs. The location is near a BART station, a mass transit overhead rail system that runs through much of the San Francisco Bay Area.

Over the years, Oakland has presented a changing face to the public. In World War II, it was part of what was described as a “second gold rush” as the result of defense plant operations. In 1966 , the city was the headquarters of the Black Panthers, whose co-founder, Huey Newton, attended high school there. Today Oakland is involved in a wave of gentrification that has created tension­­ within the community.

It may be fitting for the agency to return to what is known as the East Bay area in California. Its first, temporary headquarter was located in Emeryville, just three miles up the road from its new space. 

California's Stem Cell Agency Needs New Home by This Fall; Faces $1 Million in New Costs

The California stem cell agency isn’t quite at the stage of “Ain’t Got No Home,” the title of the immortal hit song from 1956.  But the search for a new roost for the research effort is intensifying.

And it will likely add another $1 million or so to the agency’s annual operating costs. 

The $3 billion agency now operates out of free digs in San Francisco in a gentrified neighborhood that was a tad gritty back when the agency moved in a decade ago. Today the area is much tonier. Even the Happy Donuts shop down the street (open 24 hours) has cleaned up its signage, and a chichi pizza parlor is located on the ground floor of the stem cell agency’s building.

Come next fall the agency will be moving out of its roomy offices that were built to its custom orders. No more free rent – a benefit valued at about $1 million annually by the agency’s auditor. Gone will be the free parking, a matter of great import in San Francisco.

The free office space came as the result of a $17-$18 million package put together by San Francisco to entice the agency to the city. 

The California Institute for Regenerative Medicine (CIRM), as the agency is formally known, is looking for about 12,000 to 18,000 square feet(see specifications list below). On Nov. 14, 2005, when the agency moved into its current space, it had about 20,000 square feet with 18 window offices, 17 internal offices and 19 cubicles, according to a CIRM document.  That was for about 25 to 30 employees. Those employees currently number in the mid-50s, not a large number to be handling $3 billion.

In December, the governing board’s Governance Subcommittee briefly discussed what the agency is seeking. The specifications call for a facility that could accommodate the meetings of its board of directors, which would be a major change. CIRM would like a room that could handle 50 to 75 people. Twenty-nine persons sit on the board. The space would appear to be large enough to handle normal public and staff attendance but fall short of the space needed for the few occasions when large crowds appear. 

Board meetings have generally involved rented conference rooms at hotels. The hope is that a meeting room within CIRM offices could defray meeting costs.

Office space costs have skyrocketed in San Francisco over the last several years, pushed upward by the booming tech industry. According to one office space expert, 12,000 square feet of Class A office space in the city of San Francisco could run as much $900,000 a year with additional parking costs of up to $450 a month per stall. If the agency wants 18,000 feet, the cost climbs to roughly $1.4 million.

Given that situation, CIRM has expanded its search to include cheaper locations across the bay from San Francisco, including Oakland, where California Gov. Jerry Brown has a home, and Emeryville, a city once known as Butchertown because of its slaughterhouses. Today Emeryville businesses include the Pixar Studios. CIRM was also housed in Emeryville in 2005 while it waited for its offices in San Francisco.

At the December governance meeting, Art Torres, vice chairman of the agency, said that the city of South San Francisco is also on the list of possible locations. Genentech has its headquarters there and sponsored a sign declaring the city as the “Birthplace of Biotechnology.”

During the Governance Subcommittee meeting, one board member, Al Rowlett of Sacramento, pressed for consideration of other cities. Torres, who was leading the discussion, rebuffed him, according to the transcript of the meeting. Torres said that the four locations are being considered because the staff lives in them or nearby. He continued,

“I would just hate to move to an entirely different new city and then people have to make very difficult decisions on whether they could do so or just leave CIRM. At this critical stage of our development, I would feel that would be a burden that would be very heavy for us.”

Torres also said he is working with the city of San Francisco to see if it can persuade landlords to ease rent or provide some other kind of support.

Randy Mills, CEO of CIRM, told directors in January that the office move could lead to some disruptions in its activities. The agency last week reported no major new developments in the office space search. In 2009, the agency considered the possibility of use of a nonprofit to own the office space, given the legal cap on CIRM's operational budget. However, that possibility has not surfaced publicly in recent years. 

For those who want to know more about the inimitable Clarence "Frogman" Henry, who wrote and sang "Ain't Got No Home," here is a link to his Web site.

Here is the list of specifications discussed by directors in December.

   CIRM Office Space Specifications December 2014 by DavidJensen

Legal Action in Multimillion Dollar CIRM HQ Promises

The California stem cell agency is embroiled in a $425,000 flap with its landlord as part of the City of San Francisco's deal to pick up millions of dollars in agency's expenses as part of the city's successful bid to land the CIRM headquarters.

Reporter Sabin Russell of the San Francisco Chronicle today wrote that the agency's directors have authorized legal action against Stockbridge Capital Partners, owner of the building housing CIRM.

Russell wrote:

"At issue is approximately $425,000 in annual operating costs for items as diverse as electricity, janitors, parking privileges and fees similar to those paid by condominium owners.

"Part of the deal, according to stem cell board Chairman Robert Klein, was that the state-funded institute would not have to pay those costs. 'A couple of months ago, we had a meeting with Stockbridge, and at that time they assured us they would pay all expenses. They have not lived up to the representations made to the mayor or ourselves,' he said.

"Adam Alberti, spokesman for Stockbridge, said Wednesday that the company remains committed to keeping the institute headquarters in San Francisco. 'We are in year two of a 10-year rent-free deal,' he said. 'We will continue to meet that obligation.'

"Alberti said that so far the firm also has covered about $1 million of operating expenses - costs that were to be covered by 'private fundraisers and other parties' who have yet to come through with the money. 'We are working with the city and other folks involved to find ways to cover this,' he said. 'Ultimately, the guarantor of the deal is Stockbridge.'"

The dispute raises questions about whether other promises made in San Francisco's multimilllion dollar bid are being fulfilled. As far as we know, no public accounting has ever been made.