In response to falling occupancy rates in mid-priced studio apartments and declining rental rates for commercial office space in San Francisco, early last year, a developer built a studio apartment building on the corner of Grand and Howard Streets. Known as the Wedge House, it opened in June 2014 with 54 one-bedroom and two-bedroom apartments ranging in size from 650 to 1,200 square feet, decked with multifunctional elements such as the best rig mats. A fourth floor penthouse offers the largest units with four bedrooms, a rooftop deck with a hot tub and a working fireplace. A small retail store occupies the ground floor.
Typically, the flats had no furniture, but instead were pre-fabricated by Amateis Workplace Solutions Inc. in Mexico and shipped to San Francisco. The units were built off-site, using real estate as a building block. “The fact that they were built in a warehouse and delivered to a site – and then stacked on site – eliminated the need for hardware and installation,” said Jaime Lucas, executive director of the Industrial Design and Construction Institute, a nonprofit group working to increase the interest of engineers, designers, and architects in innovative, advanced construction techniques. “The building had a barrier between the interior and exterior, and as a result it has dramatically increased the utilization of the building.”
Other building owners such as San Francisco-based Urban Energy Solutions, which has developed 12,000 residential units in the past 50 years, and Sterling Properties, one of the country’s oldest office developers, have followed suit, incorporating industrial spaces into their office and residential projects. So you might be on site and delight in finding an outlet such as Evoke Winery on the same premises as residential units and office space, signifying this crossover-type lifestyle that’s emerging.
Bill Dellinger, the founder and CEO of Urban Energy Solutions, said that industrial spaces have become an increasingly popular option for building builders. “Industrial is the next best thing to going up,” he said. He added that, in addition to commercial office space, such developments offer small industrial businesses the opportunity to take advantage of potential cost savings by making use of existing equipment in the off-site manufacturing facility and then transporting the pieces to the site of the completed structure.
The trend has helped create a wide range of new work spaces. Unlike commercial office space, which rents for $150 a square foot, industrial space rents for $40 to $60. Still, some observers said that industrial spaces may not be ideal for retail operations. “There is not a lot of activity that comes from a retail customer’s side,” said Jason Kistler, director of planning for the Oakland Technology Center. “They come for the freight delivery, for the use of the dry-stack facility and the manufacturing.” These spaces should really be used for industrial purposes as this is what they were really designed for. Some of these spaces are large and on many different floors, so those renting might want to visit Platforms and Ladders for industrial stairways to keep the theme, whilst also making the space more accessible. The space could be used for storage, for example.
In addition to commercial property owners who are expanding their office spaces and commercial retail properties, and in an effort to capitalize on the booming mid-priced market, other landlords are considering creating multi-family residential apartments with industrial-office space components. Savvy movers are adjusting their service costs accordingly too, no longer grading zones according to whether they’re commercial or residential, as the lines between the two have blurred considerably.