Markets: Richmond, CA Overview
Assessing an Opportunity in Richmond, CA
Ford Plant may be an attractive option to businesses seeking creative R&D and showroom/office space in a centrally located destination to growing talent nodes in the North and East Bay.
Factors Driving Desirability:
Millennial migration away from South Bay: Expensive R&D space in SF and South Bay becomes less attractive as talent moves North and East; Millennial migration out of SF has trended north to Marin and east to Berkeley/Oakland vs. down the peninsula.
Light manufacturing growth in Bay Area: Tailwinds behind energy tech, agriculture tech, local F&B manufacturing, and construction tech contribute to the potential tenant pool. Onshoring of manufacturing accelerated by COVID may contribute to growth (in 2019, >50% of surveyed manufacturing execs said they were considering onshoring).
Value-add idea: Ford Plant as food manufacturing hub – The East Bay has seen growth in F&B manufacturing (e.g. San Leandro has 50 food manufacturers) – could Ford Point attract high growth food/CPG businesses and create placemaking opps as tasting hub (a la Industry City).
Value-add idea: Ford Plant as a modular design facility + showroom for design-build startups – in the Bay Area affordable housing incentives/loosening regulations have led to an influx of Accessory Dwelling Unit businesses and modular housing startups.
Value-add idea: Ford Plant as clothing manufacturing, distribution, and showroom – optimal location for local/DTC distribution + new retail destination. The chart below shows how Richmond is surrounded by high growth e-commerce spending nodes.
Growing e-commerce spend in surrounding areas
Rising car ownership shifts transit expectations: Migration to the North and East Bay also changed commute style and transit expectations for Bay Area millennial workers; more employees will likely travel by car (or bike via new lanes delivered in 2019) and pay less attention to public transit access.
“Office as destination” and desirability of outdoor space: Bay Area tech execs have become vocal about the post-COVID office as a place optimized for creative mingling and collaboration – a local broker claimed “outdoor patios and gardens will beg a premium as critical social gathering spaces in a meeting-oriented vs. desk-oriented culture”. Waterfront space designed as a destination may be attractive.
Risks:
South Bay competition for R&D space / migration outside of Bay Area
Lack of public transit / talent likely coming from surrounding area, not Richmond directly
Political resistance to development – is there opportunity for affordable housing development infill?
Waterfront climate risk / wind/fog impact to desirability as a destination
Demographic Overview
The zip code surrounding Ford Plant has seen faster growth in 6-figure earners than Richmond’s city center, and nearby Northwest Berkeley has experienced outsized growth – NW Berkeley is accessible via bike/easy commute.
More Millennials have moved to the North and East Bay than South Bay over the past five years, with additional migration to Sacramento – seeking more space, affordability and quality schools. Richmond is centrally located to accommodate this talent shift:
Growth of R&D Businesses in the East Bay?
Rising rents in Silicon Valley and San Jose and movement of talent North/East may push businesses with manufacturing and R&D needs to the East Bay. Talent from Fremont, Hayward, and Newark manufacturing hubs can easily access Richmond.
Manufacturing:
Growing manufacturing segments on rise could benefit from strong talent pool in East Bay
East Bay manufacturing sector has added 102,600 manufacturing jobs in the last five years (through 2018) so it employees 102,500 people.
Manufacturing % of overall employment in East Bay has increased by 13% since 2003
Growth in SF/East Bay Manufacturing jobs mirrors South Bay (pre-COVID):
Renewable Energy + Storage:
Global supplies of renewable electricity are growing faster than expected and could expand by 50% in the next five years, powered by a resurgence in solar energy
The cost of solar power is expected to decline by a further 15% to 35% by 2024, spurring further growth over the second half of the decade.
Incentives: The rapid growth of distributed energy resources such as solar PV, batteries, and microgrids has introduced new technology options that support grid resiliency. In the first half of 2019, behind-the-meter installations were up 72 percent from the previous year.
Exemplary companies
Proterra electric bus manufacturing, currently located in Burlingame (raised $200M in Oct)
Tesla looking to vertically-integrate its battery manufacturing vs. doing in Reno
Bloom Energy is currently in N. San Jose, but facing scrutiny over profitability could be incentivized to relocate some manufacturing and showrooms to East Bay
Food Manufacturing + Ag Tech:
Growth in alternative food and agriculture production requiring R&D space
Exemplary companies
Memphis Meats, raised $160M focused on manufactured meat, currently in Oakland
Plenty, vertical farming, raised >$541M, currently located in South SF
Hardware
SF remains a nucleus for high-growth hardware and robotics businesses - e.g. Hax Accelerator in downtown SF
Exemplary companies:
Simbe Robotics, retail robotics, just raised $26M - currently based in SF
Bellwether Coffee, coffee roasting hardware - currently based in Berkeley
Transportation + Mobility
Bike Accessibility
A bike path was approved for Richmond-San Rafael bridge, connecting Marin to Richmond, >3k rides were recorded on its first day of opening in November, 2019. It is in a four-year pilot period. Weekend trips were gaining more traction than weekday, however, during early months:
< 1.5 hour bike ride via safe path from Marin
“We have a crew of friends who have been biking over the bridge from Marin to East Brother’s brewery in Richmond” -- Larkspur resident
Commute by Car
Vast majority of commuters arrive by car
Rising car ownership in Bay Area – less dependence on public transit [stats here]
Culture + Desirability
Different growth and demographics seen in Central Richmond vs. waterfront Richmond (Southwest), which may attract periphery growth from North Berkeley
Ferry/bike commute possible
East Bros Brewing + Purity Wine Bar attract SF/Marin/Berkeley/Oakland crowds
Social Media Data:
Relative to other R&D hubs (e.g. Hayward), Richmond is closer to cultural nodes with that score high (blue) on early growth indicators such as LGBTQ culture and art affinity:
