By George Avalos
OAKLAND — Blue Shield of California has agreed to move its headquarters and 1,200 workers to Oakland, the nonprofit health plan said Wednesday, a move that will help it escape fast-rising office rents at its current location in San Francisco.
Blue Shield’s move represents the largest relocation of an office tenant from San Francisco to Oakland in at least 30 years. The health care company will move to the City Center complex in downtown Oakland.
“This is huge for Oakland,” Mayor Libby Schaaf said Wednesday in an interview with this newspaper. “It’s an amazing time for Oakland. We are seeing unprecedented levels of revitalization and investment in Oakland.”
The health care company is leasing a third of the space in the 600,000-square-foot, 24-story 601 City Center building. The office tower is being developed by a joint venture of Shorenstein Realty Services and MetLife.
“After extensive evaluation, we believe the move to Oakland will lower our administrative costs, allow us to invest in our people, services and products, and better position us to scale our business as we grow to serve more members across the state,” said Paul Markovich, president of Blue Shield.
The building should begin construction this year and be ready for Blue Shield to move in during the July-through-September quarter of 2019. The lease for the property was arranged through commercial realty brokerages Jones Lang LaSalle and Cushman & Wakefield.
Blue Shield of California has been located in San Francisco since it was founded 78 years ago. Blue Shield’s executives and most of its employees will relocate to Oakland.
The Blue Shield of California Foundation, the organization’s philanthropic arm, will remain in San Francisco.
“For nearly eight decades, Blue Shield has been a leader in the San Francisco business and philanthropic communities,” Mayor Schaaf said. “We’re happy that Oakland can now share directly in this strong and proud tradition.”
The tech boom in San Francisco has lifted office rents in the prime spots of that city to spectacular levels. But the soaring office rents make it tougher for non-tech companies to pay what San Francisco commercial landlords demand.
Office rents in San Francisco are roughly 20 percent to 30 percent higher than they are in downtown Oakland, estimated John Dolby, one of the Cushman & Wakefield brokers involved in the Blue Shield transaction.
“This deal signifies that downtown Oakland has changed dramatically,” Dolby said. “With the new mayor, the amount of investment in the downtown, that has dramatically improved the quality of life in downtown Oakland and is attracting top-quality tenants.”
In 2015, Uber Technologies unveiled plans to create a co-headquarters complex with hundreds of workers in a downtown Oakland office and retail complex that the ride-hailing startup is redeveloping. Pandora Media also has its headquarters in downtown Oakland.
“Today’s announcement solidifies Oakland’s status as the center of health care and tech in the East Bay,” Schaaf said.
Downtown Oakland also has emerged as a center for popular, cutting-edge restaurants and night life, with much of that activity centered in the fast-rising and bustling Uptown District. And as part of a quest to extend the downtown beyond an 8 a.m. to 5 p.m. Monday-through-Friday urban center, Schaaf said Wednesday her administration is committed to starting or completing 4,500 new residential units in Oakland.
“As someone who was born and raised in Oakland, who grew up experiencing a bustling downtown and then seeing it fall on hard times, it is fantastic to see the energy in downtown, both commercial and residential,” the mayor said.