HOME   >  TERRANOMICS IN THE nEWS   >   STARBUCKS, MAGIC TEAM up again in Oakland     April 19, 2004 Starbucks, Magic Team Up Again in Oakland by David Goll - East Bay Business Times   Starbucks Corp. and the Los Angeles development company led by former NBA great Earvin "Magic" Johnson are looking for another score in Oakland as they expand into the East Bay. Five years after collaborating on their first successful coffee shop in Oakland's Fruitvale Station shopping center, the corporate tandem has opened a second store in the city's renovated Old Oakland downtown historic district. Now numbering 66 in the nation, these joint efforts by the Seattle-based specialty coffee behemoth and Johnson Development Corp. are aimed at ethnically diverse communities, which are often marginalized by mainstream retailers. But there isn't much marginal these days about Oakland's resurgent commercial core. "A Starbucks in that location will do incredibly well," predicted Steve Cutter, a retail broker for San Francisco-based commercial real estate firm Terranomics. "It's a great bridge between City Center and the Jack London Square waterfront area. It's yet another indication how strongly this area is coming on." The 1,800-square-foot shop at Broadway and Eighth Street features the same food products, upholstered furniture and cafe tables as found at any of the other 7,500 Starbucks locations worldwide, but it also sports a wall-sized mural reflective of the surrounding community and a plaque with messages from both Johnson and Howard D. Schultz, the coffee giant's chairman and chief global strategist. The companies evenly share the cost of opening the shops. Two other East Bay cities will also benefit from this corporate pairing, as new Starbucks/Johnson coffee shops will open next week in Richmond and this summer in San Pablo, according to Lisa Wright, a Starbucks spokeswoman in Los Angeles. As one of the nation's biggest melting pots, most of Oakland meets the "ethnically diverse" criterion set by Starbucks and Johnson Development. To be selected for one of these special Starbucks, one requirement supersedes all others - the same required of all Starbucks shops. "First and foremost, it's got to be what we feel will be a good location for a Starbucks," Wright said. "If it's in a densely developed urban area, like Old Oakland, we want it to have a large amount of foot traffic. If it's in a shopping center or along a busy commercial street, we want there to be a certain level of (vehicular) traffic passing by." Old Oakland fits all the important requirements, Wright said. "It's a great area for all kinds of traffic," she said. "We are excited to be there and really have been embraced by the community. Our Fruitvale location has been very successful." Of course, the people who work and live downtown haven't had to walk too far to find another Starbucks, with one five blocks away at the popular City Center retail and office development. Four other Starbucks shops are scattered around town. "We have a very aggressive real estate department," Wright said when asked if there may be more East Bay locations. Chris Curtis, senior vice president of Shorenstein Co. LLC of San Francisco, which manages 20 million square feet of commercial space nationwide, including City Center, said the Starbucks location at Broadway and Eighth is "not exactly an unlikely spot" for a successful retail operation. Restaurants and specialty food operations are doing especially well downtown, given the area's big daytime population of office workers. "Things have really improved in that area. We are certainly happy with our retail progress at City Center," Curtis said, adding that retail occupancy is about 95 percent. "When we started in 1996, we had mostly local, mom-and-pop owned retailers there, but once we were successful in getting Max's (Diner and Bar) to come in, then Noah's (Bagels) followed, then Jamba Juice and so on. Since we now have more national retailers, we want to make sure we keep a blend of local and national tenants." While the increasing number of housing units being built downtown has helped retailers, many still close weeknights and weekends. But the year-round "Third Thursday" program featuring an artist and a display of their work at various downtown venues is beginning to help enliven the area during the late afternoon and early evening hours, Curtis said. Curtis said two new retail tenants should be announced soon to fill about 10,000 square feet of retail space at the new 555 City Center tower. Thirteen blocks down Broadway, plans are far more ambitious. Although the developer is haggling with City Council members over details, the dramatic and long-anticipated expansion of Jack London Square is moving closer to reality. As envisioned by Ellis Partners, the $375 million redevelopment project will include 950,000 square feet of retail and office space, a 185,000-square-foot food court and culinary institute, a 250-room hotel and conference center, a 1,600-space parking garage and six new screens at now nine-screen Jack London Cinema, Cutter of Terranomics said. "All the recent and future residential development is great because it means thousands of more people down in this area on nights and weekends," said Cutter, who said another 11,269 housing units are in the planning pipeline along the waterfront districts of Oakland and Alameda. "These will be mostly young professionals, so this kind of development is nothing but good news for retailers." ###       © 2004 Terranomics Retail Services. All rights reserved.