San Leandro Makes Bid to Become East Bay Tech Hub

By Aaron Mendelson

Like many towns on the periphery of the tech boom, San Leandro wants a piece of the action. But this former industrial city has a unique asset: a loop of fiber optic cable running below the ground. The city touts broadband connections to the loop as 2,000 times faster than typical Internet hookups.

The loop, called Lit San Leandro, grew out of a 2011 meeting when Pat Kennedy, who founded the San Leandro-based software firm OSIsoft, approached the city and offered to put $3 million of his own money toward ultrafast broadband. The city has contributed its own resources, and received a US Ignite grant to expand the loop in 2013. Broadband kept OSIsoft and its more than 320 employees in San Leandro, which both parties wanted. Kennedy figured his contribution was a way to give back to his city.

“I’ve actually been a 35, 40-year resident of San Leandro,” Kennedy says. “And it became clear that these industrial cities — that are really not going to be (the first) on the list, of course, for the broadband, the fiber — we’re really going to suffer as a result.”

Today, about 140 businesses connect to that fiber. They range from tech startups sharing rooms to solar and video companies.

Many of the businesses were already based in San Leandro. But Kennedy, as well as the city, hope that broadband draws new companies. “If your ideas revolve at all around manufacturing,” Kennedy says, “then San Leandro is a good place to look.”

He pitches the East Bay suburb as centrally located and accessible, with two BART stations and Interstate 580 and 880 running through it.

And San Leandro has something that’s at a premium in the Bay Area: space. When many of San Leandro’s factories shut down in the '70s and '80s, they left behind underused space. Places like West Gate, a former Dodge auto plant that’s now a shopping mall.

Now, where cars were once built, the second story of the former plant houses more than 100 offices that can be connected to the fiber loop. This part of the building is known as The Gate.

Type A Machines moved into The Gate in January. The San Francisco-based company designs its 3-D printers in the city but builds them in San Leandro. Company officials say they were enticed by the broadband connection and the opportunity to grow in The Gate, and the company began renting three offices.

“As we expand, we’ll actually add additional lines in this space," says Type A founder Andrew Rutter as he stands on the company's production floor. "And so the idea is that we’ll be able to expand and fill this and really turn it into a really high-volume production space.”

If all goes well, Type A could more than double its workforce in San Leandro, to around 60. And they’ll be looking for more space. “It’s really hard to find a space where you can expand that rapidly and by such a big margin,” says Rutter. “Because most places, they just don’t have the additional space lying around.”

San Leandro has that space. At one time, there were more than 20,000 manufacturing jobs here. In 2013, only about 6,800 of those jobs remained. Industrial-zoned land makes up nearly a quarter of the city, much of that space now used for storage, which doesn’t provide much employment. A 2013 report calls these areas “neither memorable nor particularly pleasant to get around.”

On the other hand, a presentation by City Manager Chris Zapata calls broadband “a laser cheetah with explosive power accelerating economic growth.” San Leandro’s new chief innovation officer, Deborah Acosta, frames the issue another way: “how do we reenergize this industrial space to actually become alive again?”

Acosta tries to convince businesses like Type A to set up shop here. She’s probably the only city employee with bright red streaks running through in her hair, and she says that touch puts people on notice.

“When they see my red hair, they’re going, ‘Holy smokes, something’s different here. I think I need to pay attention,’” Acosta says.

She notes that San Leandro's economic development plan has included language about becoming a tech hub since the late '90s. But that dream “sat there as words on the page until Lit San Leandro came along. Suddenly they realized, ‘Wait a minute, we don’t have to talk about this anymore. We’re actually there, we’re actually part of it. I mean, we have to do something with it now. But we can’t complain that we don’t have the infrastructure,’” Acosta says.

And that infrastructure, San Leandro hopes, can bring back jobs and reorient the city’s economy. The city, Pat Kennedy and the federal government have invested more than $13 million trying to create a tech hub in San Leandro. And Acosta says about 90 jobs have been created by Lit San Leandro since it launched in March 2012.

That might seem like a modest return. But Acosta and Kennedy think they’re on to something. Next up in San Leandro are three brand new office buildings next to BART — more than half a million square feet — with those ultrafast connections. Kennedy’s company, OSIsoft, will move in as the anchor tenant, and Acosta says that investment in the project will exceed $200 million and create 2,000 new jobs. The city is convinced it will fill up with tech startups priced out of San Francisco and Silicon Valley.