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September 25, 2008, 5:30-7:30 p.m., Doubletree Hotel, Rohnert Park

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Enphase among new downtown Petaluma tenants

3 OTHER FIRMS, INCLUDING ENVIRONMENTAL ENGINEERING FIRM ARCADIS, ALSO RELOCATING

PETALUMA – Downtown Petaluma is set to welcome 80 employees this fall when a few companies relocate there.

Solar-power-equipment startup Enphase Energy is planning to move into 10,000 square feet of offices in the Waterfront Office Building by Basin Street Properties.

Enphase has developed a small voltage inverter to convert the potentially deadly direct current from rooftop photovoltaic panels into safer alternating current usable inside of an office building or other business. The company received $6.5 million in initial funding earlier this year and already has 40 employees.

In another part of Basin Street’s several-block redevelopment project, environmental engineering firm Arcadis is moving its 16-person Petaluma office to the recently completed Petaluma Theatre Square residential-office-retail development. The international company inked a five-year lease for 8,000 square feet.

“Moving to downtown will likely help Arcadis to grow the Petaluma office and expand within the North Bay area and also attract new young talent from the local university, Sonoma State, which has a geology department,” said principal engineer Scott Davis.

Arcadis US acquired its Petaluma office at 1670 Corporate Circle nearly two years ago with the acquisition of Blasland Bouck & Lee, according to a spokeswoman. The team handles environmental remediation projects from Antioch to Mendocino County and beyond.

Maritime staffing and engineering firm Alaris Companies LLC, formerly Armada Companies, leased 3,000 square feet also at Petaluma Theatre Square, located at 140 Second St., for three years.

The six-person firm interviews officers and key crew the firm places with major shipping companies and has outgrown its 800-square-foot location in Petaluma Marina Office Center, according to CEO Bobbi Wolff.

Two years ago she started her maritime employment and engineering firm with just herself and a couple others. Now the company is at the forefront of “green” shipboard power and heightened need of late for officers trained on vessels that bring liquefied natural gas into the U.S. Both Arcadia and Alaris are set to move in September.

Also shifting in Petaluma is Tangram Insurance Services, which is moving its four people from 101 Second St., a mixed-use building called Basin Street Landing.

“The downtown Petaluma location, with nearby shops, restaurants and other business services as well as accessibility to the freeway, are the kinds of amenities we look for in an effort to provide a great working environment for our employees, while also offering convenient access for our clients,” said Tangram President John Shea.

Recent leases bring the occupancy rate for the office space Basin Street has built in the Theater District redevelopment area in central Petaluma to 88 percent. “There is some activity,” Mr. Stranzl said about the market for commercial space in Petaluma. “A lot has been under the radar.”

The Petaluma office market has been challenged since 2001, first by the scaling back of telecommunications and technology companies then by companies associated with residential real estate.

As a result, more than a quarter of the 2 million to 3 million square feet of office space in the city was available for lease or sublease in the first quarter of this year, according to commercial real estate brokerages Keegan & Coppin and Orion Partners. When top-class office space is considered, about a third of the space is vacant, according to Orion.

As asking rates for class A space has dropped up to 10 percent from a year ago, some companies are taking the opportunity to trade up, according to Trevor Buck of NAI BT Commercial. For example, Basin Street is asking $2.35 a square foot per month full-service for downtown office space, compared with $2.50 last year.

“What we’re seeing now is a flight to quality,” Mr. Buck said. “Because of rental rates in Petaluma, tenants are leaving B and C class buildings and going to A for properties that are well-located and have good construction.” Examples of such deals he’s brokered recently are nonprofit Summer Search’s expansion from 900 square feet to 2,600 square feet at Foundry Wharf and golf course management firm CourseCo’s expansion from 3,000 square feet to 5,000 square feet at 1670 Corporate Circle.

He is working with companies interested in leasing 10,000 square feet of office space in Basin Street’s Redwood Business Center project on the east side of Highway 101 in Petaluma and a company looking to expand from 20,000 to 50,000 square feet in Redwood Business Park to the east.

Retail leasing in Petaluma, however, has been slower, according to Mr. Stranzl. For example, about 13,000 of the 37,000 square feet of retail space in Petaluma Theatre Square is available for lease. Retailers nationally have been pulling back expansion plans because of weak consumer confidence.

Matt Brown of NAI BT Commercial represented Alaris for its lease. Sean Heaton and Josh Lindberg of Cushman & Wakefield represented Basin Street in the Arcadis deal, and Dave Linsmayer of The Staubach Co. represented Arcadis. Mr. Heaton and Mr. Lindberg also represented Tangram for its lease.

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