Downtown Oakland, like its neighbor across the bay, has a serious empty-office problem.

Vacancy rates continue to break records, topping out last year at 34.4%, according to Cushman & Wakefield. 

But in San Francisco, there’s at least a feeling of light on the horizon, where in the last quarter, office tenants occupied more total space than they emptied, tugging the city’s vacancy rate downward for the first time in six years. 

However, The Town — due in part to its historic role in capturing San Francisco’s spillover — is still stuck at rock bottom.

Several opportunistic buyers have been snapping up office buildings on the cheap with plans to reposition them. The deals include Lakeside Group and Rubicon Point Partners’s purchase of 180 Grand Ave. at an 82% discount and Frontline Realty Capital’s purchase of 1440 Broadway at an 88% reduction.

But one local developer stands out as it looks to turn a project in the heart of downtown into a reactivation point for a beleaguered neighborhood and make it a destination on its own.  

“San Francisco’s working population lives in the East Bay,” said Colin Behring, head of Behring Companies, whose firm late last year purchased 1950 Franklin St. in downtown Oakland for pennies on the dollar: $14.3 million, $32 per square foot. “For the price you pay there, you can get a lot more here and keep more of that salary.” 

Like many aging, vacant office buildings, the tower has seen its value fall sharply since the pandemic. The 21-story concrete box was built in the 1970s and served as the staid home of Kaiser Permanente’s executive team for two decades. 

Next week, 1950 Franklin will welcome new tenants on the renovated 18th floor, which has been stripped of its worn carpet, cubicle farms, and ceilings lined with outdated fluorescent light bulbs.

The older property had a few key advantages for Behring besides cost. For one, it came with a 635-space parking garage, nearly impossible to construct nowadays. But more important, the garage is directly adjacent to Behring’s newly constructed 39-story apartment tower, 1900 Broadway.

Taken together, the developer has amassed two blocks worth of real estate — one new, one old — on top of a BART station and steps from the Fox Theater and Paramount Theatre.

Behring is marketing the bundle as an “urban campus” offering “extreme mixed-use” that will allow paying members to live, work, and play in one place. That’s the ad copy. What it means is that the developer is selling the building to multiple types of users rather than just apartment residents. 

Freelancers, for instance, can rent coworking space starting at $499 a month and access the rest of the campus’s amenities, too, such as the 6,000-square-foot gym and penthouse lounge. For larger teams or small companies, the building has two floors of spec office space, totaling 53,000 square feet, that can be leased. 

By having the former Kaiser building plugged directly into the new complex, Behring said, the location offers a distinct option for employers of all sizes. Meanwhile, workers can save time and money with virtually no commute. 

Similar mixed-use concepts wooing office tenants can be found in Santana Row in San Jose, Springline in Menlo Park, and Mission Bay in San Francisco. 

“Oakland needs to attract companies back to downtown,” Behring said. “And we’re doing our part by offering the best type of urban living situation at a price that no one can beat.” 

Like many developers who spend their time asking investors for money, Behring has perfected his pitch. 1900 Broadway will pay for itself, he says, because the city of Oakland laid the groundwork by rezoning key corridors of downtown over the last decade, removing height limits to accommodate dense housing development. 

“Oakland was always the best place to do this,” Behring said. A project of that size elsewhere in the region either wouldn’t have been approved or wouldn’t generate enough revenue to pay off its loans during a down real estate cycle. 

The deal for the development of 1900 Broadway was made with the city in 2017, Behring said, with half the development costs financed with a bank loan and the remainder split between a pool of EB-5 foreign investors and the developer’s own capital. 

There’s no denying the new 456-unit residential complex is grand. After six months, the tower is 70% leased and 60% occupied, Behring said. Spanning 39 stories, it looms over everything around it, offering panoramic views spanning San Leandro to Berkeley, as well as the San Francisco skyline. 

One amenity not found elsewhere: a fleet of Teslas dispensed from an underground vending machine for residents to book on-demand. 

“In other developments, these are often just throwaway spaces that lenders will even write off as having no value,” Behring said. “But if you can deliver spaces that people actually want to use, it can pay you back in dividends.” 

Beneath the buzzwords is a personal vision. Behring said the inspiration for 1900 Broadway came two decades ago when he was living in Shanghai, amid the city’s rapid urbanization.

“You stepped out the door, and everything was there,” he said of Shanghai’s reliable transit and mixed-use urban planning. 

“Cost of living isn’t just about the rent you pay each month,” he continued. “Three or four amenities here in the States can easily add up to over an extra $1,000 a month, not counting the time you lose commuting to and from work.” 

Even if a resident of 1900 Broadway needed to get to San Francisco’s Financial District for work, Behring said, the BART line outside the lobby could get them there faster (about 20 minutes without delays) than it would take to commute within the city. 

Shanghai was also where he met his wife, Elizabeth Premazzi, a native of Brazil, who was working in Asia as an architect. Today, she leads Behring Co.’s design team. 

Under her direction, white and gray were traded for black as a color scheme at 1900 Broadway. Her decision to put an open mailroom in the building’s lobby was meant to instill a sense of public space and create opportunities for residents to interact, she said. 

The co-living apartments, akin to living with roommates, come with Ori cloud beds and pocket closets that can open up more space. Two- and three-bedroom units are located on the higher floors and start at $3,600 a month. 

Still, there are significant challenges. Developers who built more than 10,000 new homes in the city’s last “construction supercycle,” between 2018 and 2022, are feeling the squeeze of depressed demand. One sold two new apartment buildings in December for more than 50% off their previously appraised value. 

Behring said he hopes his firm’s “silver bullet” will be that 1900 Broadway’s campus will form its own self-sustaining community. Between the two buildings, the campus might bring up to 4,000 people back to the area, he predicts. 

“No offense to other guys working really hard, but we’re 20 stories taller than you,” he said. “And we can host your friends, family, and company all in one place.”