All aboard the hype train! Wait, this is just a BART, and it’s headed to … West Oakland?
While it’s unlikely that Jeff Bezos and Elon Musk will ever again sit among the plebians in a public transit car, the locations of their newest manufacturing plants could lead to quite a few more passengers in the Bay Area. Within a matter of two days, two of the world’s wealthiest men decided Oakland would be the backdrop for their companies’ next chapters.
On Tuesday, Bezos signed his multi-billion-dollar AI startup, Project Prometheus, onto 100,000 square feet at the American Steel Blocks industrial site in West Oakland. The next day, Musk leased 40,000 square feet for Tesla at the same campus.
And just like that, several long-time Oakland observers from the region’s blue chip brokerages feel the wait is finally over for the city to carve out its place in the AI economy. And while it may begin with AI companies leasing up space for their robotics programs, there’s an assumption it will spill over into Oakland’s long-crippled office market.
Within that same two-day stretch, Behring Capital announced plans for an AI data center at the old Lawrence Berkeley National Laboratory building at 415 20th Street in downtown Oakland.
“The Behring and the American Steel projects are completely different buildings, but they’re both monetizing scarcity, which is infrastructure,” Colliers agent Anthony Shell told The Real Deal. “One is for computing power; the other is for advanced manufacturing. That’s Oakland’s opportunity.”
Institutional capital returns to multifamily
If you needed a sign that institutional capital has fully warmed up to San Francisco’s AI boom multifamily market, look no further than Terry Fancher’s bet on a 172-unit luxury complex in the heart of the city’s “Area AI.”
Fancher’s Stockbridge Capital Group planted its flag in Potrero Hill last week by dropping $132 million on to acquire Alta Potrero, which shakes out to around $767,000 per unit.
The trade marked the most expensive multifamily purchase on a per-unit basis since 2024, though, you’d have to go back to 2022 to find a true comp. (Emerald Fund’s $1.5 million-per-unit purchase in Pacific Heights would be better classified under the I’m Sorry What? file.)
The AI boom, combined with a gross shortage of apartments, has set San Francisco’s rental market on fire, as well-to-do renters outbid one another into five-digit rents. Yet, building new multifamily in San Francisco can run $800,000 to $1 million per door, which leads investors like Fancher to salivate at the chance to get in on the market below replacement costs.
Price check
In May, amid the California Academy of Art’s real estate fire sale, TRD reported that the institution was selling one of its Union Square buildings — a former church — to Epic Church’s San Francisco chapter.
At the time, all we had was a list price for the historic building at 491 Post Street, which started at $15 million. Last week, the sale finally closed, with the nondenominational church paying $12 million, a 20 percent discount.
Taylor Flynn, a Marcus & Millichamp who sold the building, said the property had been on-and-off the market before they decided to drop the price to $14 million in a Monday phone chat. The team fielded interest from three other parties, but Flynn said Epic Church proposed the best terms, including a quick close.
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Tesla races after Jeff Bezos with latest Bay Area lease in Oakland
Residential
San Francisco
Stockbridge buys Potrero Hill apartments for $132M in SF’s priciest multifamily bet in two years
Academy of Art sells another church building — this time to an actual church
