OAKLAND — Rising up from the charred wreckage of what had been
a sleek residential development nearing completion, a sign still
stands: “Now selling … New solar, all-electric
townhomes.” Behind it, blackened walls sag above piles of
twisted, burned rubble.
After a massive fire gutted the Ice House townhome project in
West Oakland on Tuesday — the latest in a series of suspicious
blazes targeting residential construction projects — developers
and housing experts say the fallout could ultimately hit the
pockets of Oaklanders already struggling to rent or own homes in
The fires have delayed the construction of hundreds of homes
that advocates say are needed to help address the city’s housing
shortage, and builders are tripling or quadrupling their security
spending to protect against arsonists, bracing for higher insurance
costs and considering switching to more expensive fire-resistant
“The truth of the matter is, that’s just going to jack up
the price of housing,” said Greg McConnell, president and CEO of
the Jobs and Housing Coalition, which represents developers and
other major employers in Oakland.
Oakland is in the midst of a major building
boom that’s changing the face of the city as it brings scores
of large developments to house the hordes of people clamoring to
move in. Officials permitted 4,284 residential units last year, up
from just 274 in 2012. But over the past two years, five fires
have targeted four residential construction projects in Oakland
and Emeryville, impacting more than 550 housing units in the
pipeline. One of those, a 105-unit building on the
Oakland-Emeryville border burned once, was rebuilt, and then
burned again. A sixth blaze destroyed a luxury apartment complex
under construction in Concord last spring.
Officials say four of the prior fires were arson, and the cause
of two, including the most recent, remain undetermined. There was
no word late last week on the cause of the Tuesday fire at the
nearly completed Ice House, a 126 townhome project.
So far, there have been no arrests, despite rewards offering
hundreds of thousands of dollars and grainy surveillance footage
of a suspected arsonist at the scene of a fire, dressed in black
and riding a bicycle.
“Anybody in the development and building business in this area
is concerned about it,” said John Protopappas, president and CEO
of developer Madison Park Financial Corporation. “If you’re in
this business and you’re building with wood, you are thinking
about this at all times.”
One of his company’s buildings, which was already occupied,
suffered more than $2.5 million in damage when flames engulfed a
neighboring construction site on the Oakland-Emeryville border in
2016. Then, on the same day as the Ice House fire,
a blaze started in a 124-unit apartment complex Madison Park is
building on Hollis Street in Oakland. A security guard put out the
flames before they could damage the building.
Madison Park spends $50,000 a month on security at the Hollis
Street project, fortifying the construction site with a team of
four security guards and a slew of cameras.
SRM Development spent about $400,000 on round-the-clock security
and extra fencing to protect its 130-unit apartment building on
Broadway during construction, said principal Ryan Leong. The
project was finished in August without incident.
Madison Park has started designing new projects with more
expensive steel frames instead of the flammable wood frames
typically used, and Protopappas expects other developers will
follow suit. He estimates the metal framing will cost between
$750,000 and $1 million more for a 50,000 square foot building.
And Protopappas is bracing for a possible spike in insurance
costs as insurers deem the Oakland area an increasingly risky place
to build. Protopappas says his agent already has warned his latest
project will see a significant price increase.
Experts say the projects damaged by fire almost certainly will
be rebuilt, but the delays could be costly. Interest rates are
rising, which means the longer a project takes, the more expensive
it becomes, said Eric Tao, managing executive principal of
Rumors are swirling about a possible serial arsonist, with some
speculating the culprit is using the fires to make a stand against
gentrification. In the West Oakland neighborhood where Tuesday’s
fire ignited, residents walk past homeless camps to get to trendy
new bars, restaurants, coffee shops and loft apartments. Some
long-time residents are upset by the changes. Graffiti proclaiming
“(expletive) gentrifiers” defaced a street sign on 27th Street
recently, and a church on West Grand Avenue sometimes flashes
“stop gentrification” across its electronic sign board.
“Are people upset about the housing crisis? Yes,” said
Vanessa Riles, interfaith and community organizer for East Bay
Housing Organizations. “Are people upset that market rate
development seems to be a priority and affordable development is
not? Yes … People are upset about that and rightfully so.”
Neither the Hollis Street project nor the Ice House
project included any units reserved for low-income families.
Ernest Brown, co-executive of pro-development advocacy group
East Bay for Everyone, was considering buying one of the Ice House
townhomes. Brown, a 27-year-old business analyst who moved to
Oakland three years ago from Atlanta, splits $4,400 a month in rent
with three roommates. The price goes up each year, and Brown, tired
of renting, had been exploring whether he could afford to buy a
home with several other people.
But Brown was sensitive to his status as an Oakland gentrifier.
He gravitated toward new construction because he didn’t want to
buy a building where tenants had been or would be displaced.
“The Ice House-type development provides a way out of that,”
he said. “Here’s my way to put down roots in Oakland without
disrupting someone else’s roots.”
Another Oakland housing construction site engulfed by massive
construction site fire under control; cause still unknown
Suspected arsonist seen climbing scaffolding before Emeryville fire
in ATF video
Now he’s back to square one.
“Now that that option has gone up in flames, I’m now stuck
with renting for the foreseeable future,” he said. “So that’s
kind of unfortunate.”
Source: FS – All – Real Estate News 1
Could suspicious Oakland fires ignite housing prices?