Can Oakland make a comeback?

During the roaring 20s into the 1960s, Oakland was a booming metropolis. It was rich with job opportunities that resulted in the rise of a bustling city with office towers, retail centers and housing starts. But today, the East Bay hub is almost unrecognizable from even its recent past. 

The fall of Oakland was accelerated during the pandemic. As businesses shut down parts of the city vacated and crime infiltrated the streets, which has had a detrimental impact on real estate investment. 

The city’s unfortunate downturn came not long after it entered a brief phase of recovery in the early 2010s, when crime was at a 50-year low. That prosperity has all but been erased and violent crimes have been on the rise over the past two years.

Crime isn’t the only issue. Oakland has empty offices, fewer retailers and a housing crisis. This indicates real estate is faced with significant challenges and potentially limitless opportunity. 

Downtown blues

Long gone are the days of a thriving Downtown Oakland. Today the area looks more like a ghost town than a city center. 

Downtown has a vacancy rate of 29 percent, according to CBRE data. The slow return-to-office has halted foot traffic and put a strain on retail. It’s also not a safe place to be.

“Maybe some of it was Covid related. I think a bigger part of it, now, is crime,” Business owner Victor Diaz, said to the SF Business Times. “I don’t know a single retailer whose windows have not been smashed or who has not had someone come in and grab their stuff and run out.”

But despite the rise in crime, a downtown recovery is possible. According to former Hines executive Paul Paradis, The East Bay has half of the Bay Area’s workforce and large downtown projects; such as the Telegraph Tower and Hines’ office tower, could kickstart a resurgence. 

“The Oakland office market has matured with the combination of over 10,000 residential units, and companies are moving to Oakland to be closer to the large East Bay labor pool,” Paradis told The Real Deal.

Changing Chinatown

Chinatown has been hit particularly hard, with 10 percent of its business closing over the past few years.

Already caught in a declining market during the second half of 2019, retail vacancy in the culturally-rich neighborhood exceeded 6 percent in 2021, compared to less than 1 percent during 2019. 

Like downtown, crime is also plaguing Chinatown. Anti-Asian hate crimes surged by nearly 145 percent nationally in 2021, according to the Center for the Study of Hate and Extremism at CSU San Bernardino, which hasn’t evaded Oakland.

Nevertheless, retail owners and their tenants remain committed to Chinatown. 

“We understand that residents of the neighborhood have changed their buying behaviors with the recent upsurge of violent crimes, but the few retailers that are willing to sell are transacting directly with their tenants, who want to continue operating in Chinatown,” Jay Roman from Nai Norcal said.

Chinatown’s vacancy rate has begun to improve. There has been a recent uptick in retail; particularly grocery, food and dining, which is pointing towards recovery, according to Roman. And housing projects near Chinatown, such as the BART Transit Oriented Development, are welcomed additions to the neighborhood. 

Losing teams

Once a great city for sports, Oakland has seen three professional sports teams leave in the past four years. It started when the Warriors moved across the Bay to San Francisco in 2019, the Raiders packed up for Las Vegas in 2021 and The A’s are looking to follow their former Coliseum co-inhabitants to Sin City. 

Financially, the decision isn’t a tough one for the A’s to make, as the Raiders have proven. From 2021 to 2022, the Raiders jumped from the 31st most valuable NFL franchise to the 9th. The team’s value increased nearly 50%  from $3.4 billion to $5.1 billion. 

While the professional sports exodus is nothing to cheer about, it could result in big real estate plays.

The Raiders’ former headquarters and practice facility, currently owned by the city and Alameda County, is under auction and bids are due by June 30. The 120,000 square foot property is accepting a minimum bid of $35.8 million. 

It sits on more than 11 acres of land zoned for commercial manufacturing use and could draw attention from life sciences developers. The land also sits across the street from the Alameda’s Harbor Bay Business Park, which has become a life sciences hub home, with firms that include drug company Exelixis and medical device manufacturer Penumbra.

The Oakland A’s possible relocation would leave the Howard Terminal at the Port of Oakland without a development partner. While it is unclear what the vision for the port terminal would be, The A’s spent years in rezoning litigation to make it possible for a large mixed-use development. The city has also secured $260 million in funds for infrastructure improvement.

Street sweep 

In March of this year Oakland received the go ahead to clear the remainder of the homeless encampment at Wood Street that covered 40 acres under the Nimitz Freeway. The encampment had 200-300 people living there in vehicles, RVs, tents and other makeshift structures. 

While the people that formerly lived at the encampment have been displaced, debris and abandoned vehicles remain. At only a mile or two from downtown and the Jack London district, Wood Street sees a lot of traffic as people commute to the city’s few remaining hotspots. But the current state of the area makes it difficult to entice development.

“You have nobody working,” Danny Haber, CEO of Oakland-based developer oWow, said. “There’s no active spaces, and that means you have streets that are quiet and dark and empty at night, which makes people feel unsafe.” 

Oakland does have plans to address the conditions of the streets and large multifamily development projects are in the works in the areas that were cleared out. The city is moving forward to bring 500 affordable housing units to the area, and has a 170 unit project in the pipeline. 

“We were able to acquire state funding to build a new cabin shelter program, taking into account the needs and desires of the Wood Street community,” LaTonda Simmons, assistant city administrator, said in a statement.

It’s another small step in the right direction for a city living through its darkest days. But advocates and investors do see a beacon of light. They believe the projects under way and the potential for more could build the momentum necessary to swing the city in the right direction.