Petaluma's reputation grows as business incubator

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For the first time in six years, the World Centric office at Foundry Wharf was lifeless this week, an empty 8,000 square feet of waterfront space that had been vacated after the booming startup had outgrown its Petaluma headquarters.

The 15-year-old company, which has become one of the largest providers of disposable food containers and compostable kitchenware in the U.S., relocated to SOMO Village in Rohnert Park, a 200-acre clean energy development that could offer nearly double the space for its roughly 50 employees.

World Centric represents Petaluma’s latest corporate departure, further exposing a ceiling that numerous breakout companies have reached in recent years, forcing them out of Sonoma County’s second-largest city.

“We really wanted to stay at Foundry Wharf, but the amount of space we need, it just wasn’t available,” said Mark Marinozzi, World Centric’s vice president of marketing. “We did look at other locations in Petaluma — mainly on the eastside — but they weren’t necessarily built with having any ambition about sustainability.

“At some point, in order to attract those emerging, incubating startups, they’re going to have to put some investment into those buildings to make some changes.”

Petaluma has developed a reputation as an incubator for innovative startups looking for a home in the North Bay, said Ingrid Alverde, the city’s economic development manager.

Over the last 30 years, the city has cultivated a diverse business community, highlighted by strongholds in computer tech, consumer products, healthcare, advanced manufacturing, food and beverage and clean energy services.

Thanks to Petaluma’s geographic location, its emphasis on sustainability and a knack for attracting talent, the vibe of the city has enticed numerous future-minded companies to take a chance on it.

Eventually, however, enterprises like World Centric have had to make a hard choice. And more often than not, they decide to leave, unable to find sufficient space or sites that meet the energy or cost-saving standards companies seek in today’s marketplace.

“It’s kind of a life cycle,” Alverde said. “Sometimes the whole life cycle happens in Petaluma, or sometimes a part of a life cycle happens in Petaluma.”

While the reasons for each exit vary, most successful startups have followed a similar trajectory, scaling significantly in Petaluma before bumping against the ceiling.

Last month, Three Twins Ice Cream announced it was closing its Petaluma plant on First Street, and consolidating production at its facility in Sheboygan, Wisconsin. Manufacturing at two sites had become far too expensive, said founder Neal Gottlieb, impacted by a hefty lease, zoning restrictions and wastewater protocols that required pricey offsite disposal.

“We couldn’t figure out a way to become profitable, while maintaining a second factory and all the associated costs in Petaluma,” Gottlieb said.

In 2017, popular women’s apparel company Athleta moved its headquarters from Petaluma to San Francisco.

The year before, world-renown tea maker Traditional Medicinals became one of the first local companies to relocate to SOMO Village, folding its Petaluma office into 23,000 square feet of space in Rohnert Park.

Earlier in the decade, Lagunitas Brewing Co. expanded its production to the Midwest in 2013, opening a facility in Chicago that helped it become one of the largest craft brewers in the country.

Organic food maker Amy’s Kitchen shifted its operations to Santa Rosa in 2011, and recently broke ground on its long-planned production facility in Goshen, New York, the company’s first East Coast site.

In many cases, it’s an issue of timing, Alverde said, a reality made worse by a tight real estate market.

“We might have a building available or they might not,” she said. “Companies look in Petaluma and want to stay in Petaluma but it might not work out. It’s like looking for a house. It’s very personal and there’s a lot of factors.”

Growing the market for commercial space isn’t an easy task, either.

In 2010, Petaluma voters approved Measure T, which extended the lifespan of the city’s urban growth boundary that was first adopted in 1998, helping curtail expansion and protecting the area’s bucolic landscape.

As a result, infill development became the standard, and has been mostly limited to residential projects in recent years as the region grasps with a worsening housing crisis.

For commercial operations, that’s left redevelopment projects as one of the few options to expand businesses spaces in Petaluma. In fact, that’s how sites like the Foundry Wharf, which transformed the old Corliss Engine Works facility in the late 1980s and early ’90s, came into existence.

But given current state regulations, adaptive reuse projects can be costly and time-consuming, Alverde said.

In a sense, that means Petaluma is best served by continuing the trend of scaling businesses and maintaining the incubator model, keeping the real estate market flowing and zoning rules business-friendly.

Three Twins is one example of that. The organic ice cream producer’s First Street plant was the former production site for Cowgirl Creamery before they moved their cheese-making operation to east Petaluma.

Had Cowgirl not grown out of its space on First Street, Three Twins may not have been able to relocate to the area.

Alverde said her pitch to business owners looking at Petaluma remains the same, selling the city’s family-friendly atmosphere, its inventive style and growing emphasis on sustainability, whether it’s to a corporation or startup hoping to scale.

“There’s something in the DNA of Petaluma,” she said. “It’s been innovative since before it was incorporated. That spirit is here.”

(Press Democrat reporter Martin Espinoza contributed to this report. Contact News Editor Yousef Baig at yousef.baig@arguscourier.com or 776-8461, and on Twitter @YousefBaig.)

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