The East Bay hub is poised for an economic boom, but the city needs to overcome a deep-seated resistance to growth.
For an urban downtown, Oakland’s city center has long sat strangely empty.
Only a handful of buildings rise above ten stories; 40 acres of vacant spaces or parking lots litter the city. After working hours end, the streets fall quiet.
But many recent media portrayals paint Oakland quite differently. Starting in the mid-2000s, the city began to crawl toward something of a renaissance. Then-Mayor Jerry Brown’s efforts to bring 10,000 new residents to the downtown area ushered in a boom in the local culture and retail scene. About five years ago, news outlets began to take notice: The New York Times ranked Oakland fifth among the top 45 global travel destinations of 2012, teasing that “new restaurants and bars beckon amid the grit.”
But the city’s plentiful cultural moments—a new bar opening, a monthly arts festival that draws crowds of 20,000 people—mask a more pernicious truth: development-wise, Oakland is stalled.
Between 2000 and 2015, only two commercial office buildings and 5,000 housing units were built in Oakland, according to a report from SPUR, a nonprofit urban planning organization headquartered in the Bay Area. In the same time period, Oakland’s population soared by 8,000.
Before the early 2000s, poor planning and a reputation for crime had gutted Oakland of industry and inhabitants. That the city could accommodate such population growth—as well as dozens of new businesses—without substantial structural expansion is the testament to how much property had previously sat empty.
But Oakland is quickly reaching capacity. With Uber set to move into the old Sears building on Broadway at the end of 2017, the city is poised for another influx of residents and retail. The City of Oakland Planning Department in the process of finalizing a strategy for a revamped downtown area. But implementing it will require the city to evolve in many ways it has long resisted.
Why It’s Tough to Build in Oakland
Development in Oakland, says Robert Ogilvie, the Oakland director for SPUR, is caught in a catch-22. The city has not attracted enough large anchor tenants to reliably fill new buildings, making it hard to justify building on speculation. That has constricted available property, in turn making Oakland undesirable for small, fast-growing firms looking for adequate space to expand. Those companies have looked across the Bay, to San Francisco.
Commercial rents in Oakland, while rising, are still lower than the cost of high-rise office building construction in the Bay Area, which sits at around $5 per square foot per month. Many developers feel it’s not worth it to push projects at this rate without complete confidence that buildings will be filled. In San Francisco, where commercial space rents for around $5.75 per square foot per month, developers are much more comfortable throwing up a building and waiting for tenants to file in, Ogilvie says.
In addition to Oakland’s lackluster track record of commercial development, the city has a reputation for crime and poverty that sets financial backers on edge, Ogilvie says. “Some investors, especially those whose perception of Oakland depends on the public narrative, have hesitated to invest capital into downtown without more compensation for the risk they’re taking,” the SPUR report notes. As a result, job growth has been slow, and consequently, the incentive to add housing in the city has lagged.
The media narrative nowadays, Ogilvie says, tends to position Oakland as the Brooklyn to San Francisco’s Manhattan: the inevitable heir to San Francisco’s tech-driven economic upswing. But coverage tends to overlook one crucial difference: Brooklyn and Manhattan fall under the same government; Oakland and San Francisco do not. The same tides that have bolstered San Francisco’s growth will not automatically spill over to pull up Oakland. To ensure Oakland effectively cashes in on its increasing economic opportunities, it will have to devise its own way forward, which will mean coming to terms with the fact that in the case of growth, the city is its own worst enemy.
Blocking the Path Forward
Risk-averse investors are not alone in their hesitancy to build in Oakland. “The political bent in the Bay Area is anti-growth,” says Mike Ghielmetti, the president of Signature Development Group, who has worked in retail and residential development in the Bay Area for the past 25 years.
“There’s a weird kind of progressive alliance—and I say progressive, though I don’t actually believe it is—that has advocated failed policies for the past 35 years,” Ghielmetti says. They emphasize maintaining a certain quality of life, “which is code for no new housing or retail, which pushes newcomers away by keeping property values high through artificial constraints on supply,” Ghielmetti adds.
The lines of resistance around development are drawn demographically. On the anti-growth side are the Baby Boomers, who “have moved out to the suburbs, gotten used to property lines and fences, and haven’t really bought into the urban atmosphere, even though they still control the cities politically,” Ghielmetti says.
Building tall, in particular, draws controversy. The Bay Area’s history of earthquakes has made locals skittish of towers, a fear made largely irrelevant by advances in construction. Yet the concern persists: the City of Oakland is consulting with SPUR in finalizing its specific plan for the downtown area; Ogilvie, who arrived in the Bay Area by way of New York, says that much of the two organizations’ back-and-forth has revolved around building height.
In the Bay Area, a penchant for tall, dense cities is a distinctly Millennial attitude, and one that Ghielmetti says Oakland needs to welcome. The city’s current policies and prices have effectively locked out young people from becoming homeowners or renters—which will prove a detriment to the region, Ghielmetti says. “I view Millennials as the future of our cities,” he adds. “Our cities will die without them.”
What Needs to Be Done
That’s where people like Sonja Trauss come in. She’s 34, and the founder of the SF Bay Area Renter’s Federation (or BARF)—one of several pro-housing, “YIMBY” organizations to spring up in the region in response to a desperate for growth.
Trauss is pro-building, of every variety. Speaking to The New York Times, she said: “You have to support building, even when it’s a type of building you hate. Is it ugly? Get over yourself. Is it low-income housing? Get over yourself. Is it luxury housing? Get over yourself. We really need everything right now.”
The need for affordable housing in Oakland—as in San Francisco—is undeniable, Trauss says, but it should not be tackled in isolation from the rest of development. The City of Oakland recently introduced an impact fee on market-rate housing projects, which will require developers to pay the city between $750 and $7,000 per unit toward an affordable housing fund. Trauss supports this tactic because the fee is low enough that it won’t preclude developers from moving ahead with their current projects.
What has landed cities like Oakland and San Francisco in their current housing binds, Trauss says, is “an assumption that new, high-income people moving there would not have come if the new, expensive housing hadn’t been built.” The resistance to accommodating the upper end of the tax bracket, Trauss says, stems from the same aversion to change Ghielmetti has encountered in his work.
But the naysayers, Trauss says, are missing a crucial fact: “At least in San Francisco, 84 percent of the people who move into new housing, once it’s built, were already living in San Francisco,” she says. And 99 percent of high-income people move into pre-existing housing. “It’s ridiculous to fight [the influx of high-income people]: their presence, and the jobs they create, are happening whether you build or not,” Trauss says. And though it may sting the holdouts from a previous time, building more is the only way to ensure that everybody who wants to stay in the Bay Area will be able to do so.
The East Bay Asian Local Development Corporation is working to ensure that longtime residents—especially in some of the city’s most impoverished areas—will not be forced out by the waves of change. Sabrina Chin, the communications manager for EBALDC, says that the organization takes a neighborhood-centric approach to development, recognizing that building for mixed-income communities is the only way to maintain both the integrity and the livelihood of the city. To that end, EBALDC is working with private investors to buy up pre-existing buildings and stabilize the rents to ensure they will remain available for low-income tenants and for local nonprofits, even as construction grows up around them. “Longtime residents are assets to the city,” Chin says. “We’re not here to bulldoze them out, or price them out—we’re here to give them the option to stay.”
The arrival of Uber at the end of next year will bring at least 600 new residents to the East Bay, many of them coasting in on tech-industry salaries. Trauss says the crucial switch for the city will be embracing the company’s arrival for the subsequent boost in taxpayer revenue that Oakland desperately needs.
“I feel so strongly that it’s crazy to oppose newcomers,” Trauss says. Oakland is already set on the path to change; what needs to happen now, Trauss says, is for people to change their minds about how they feel about it.