A huge former federal government warehouse — now privately owned and providing a much-needed tax boost to local agencies — has bagged an online fashion retailer as its first tenant and says there are more to come.
The owners of the SFO Business Center announced that in November Tobi.com, formerly located in downtown San Francisco, finished moving its corporate headquarters into their 571,000-square-foot building near the intersection of U.S. Highway 101 and Interstate 380.
The 1950s-era warehouse that has hosted the U.S. Postal Service and Drug Enforcement Administration was bought by Chicago-based Centrum Properties and New York-based Angelo, Gordon & Co. for $56 million and renamed the SFO Business Center in 2008.
For South San Francisco, it meant a massive building that was tax exempt is now generating roughly $500,000 a year in property tax revenue, with roughly 42 percent going to local schools, 25 percent to the county and 16 percent to the city. And with the owners planning $23 million in improvements as new tenants move in, its value is expected to grow.
“We are trying to attract the ‘new economy’ companies, whether it’s an Internet-based fashion company or a solar panel manufacturer,” Centrum Vice President Michael McClean said. “There’s certain types of businesses that work very well together even if they seem like they do very different things.”
The building owners say they are in serious talks with at least two other prospective tenants — a logistics company and a local perishable goods distributor — that they hope to bring in early next year. Eventually, they hope to create 750 new jobs for the city.
The three-year lease for Tobi.com gives the 50-employee company 60,000 square feet, which “offers new opportunities as we continue to grow and develop our business,” Chief Operating Officer Karen Liem said in a statement.
The center has enhanced the city’s already-strong commercial property tax base, anchored by Genentech’s $1.8 billion worth of property, which has helped insulate South San Francisco from the budget troubles facing other Peninsula cities.
The developers still lease about 77,000 square feet at the center to the Drug Enforcement Administration, though the USPS moved out in November.
The SFO Business Center in South San Francisco is expected to be worth $109 million and generate $1.1 million in property taxes, according to a 2009 study. Here is a breakdown of yearly tax revenue for local agencies:
- South San Francisco Unified School District: $469,444
- San Mateo County general fund: $275,576
- South San Francisco: $178,310
- San Mateo Community College District: $78,853
- County education tax: $41,036
- Colma flood control, Zone 2: $33,888
Source: Brion & Associates