Kaiser Permanente shelves $900 million headquarters project

Posted on: Wednesday, March 25, 2020 By: KorchekStaff

Kaiser Permanente canceled its $900 million headquarters project in Oakland, officials said Tuesday.

The healthcare giant planned to build a 1.6 million-square-foot office tower that would have been Oakland's biggest commercial project. But this week, the company told city officials the project was no longer happening. The story was first reported by the San Francisco Chronicle.

"Delays and increasing costs related to this project caused us to re-examine the feasibility and focus on renovating our current buildings," Kaiser Permente said in a statement. "The decision is not related to COVID-19. Kaiser Permanente appreciates the hard work by the developer and its team on the 2100 Telegraph Avenue project. We wish them well with the project and look forward to welcoming new neighbors to downtown Oakland when it's completed."

Kaiser would have consolidated 7,200 employees from seven East Bay offices into a new 29-story tower in downtown Oakland. Kaiser plans to stay in its existing offices, according to Mayor Libby Schaaf.

"It's a pivot for Kaiser, and one that makes sense for their organization and members at this time," Schaaf said in a statement.

The integrated delivery system nearly tripled its net income in 2019 to $7.4 billion, due to both strong operating and investment performances. Kaiser generated $2.5 billion in net income in 2018.

Not-for-profit Kaiser, which consists of Kaiser Foundation Health Plan and Kaiser Foundation Hospitals, generated $2.7 billion in operating income in 2019 on $84.5 billion in revenue, compared with $1.9 billion in operating income on $79.7 billion in revenue for the prior year. That works out to an operating margin of 3.2% last year, compared with 2.4% in 2018.

Kaiser's project was expected to generate an estimated $23 million in one-time taxes and fees and another $15 million in annual taxes.