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Time to Look at Oakland

While Oakland is by no means an easy place to develop real estate, the often maligned East Bay city of over 400,000 residents may very well be the Bay Area’s best place to embrace much-needed development.
Reuben Duarte | @reubenduarte | August 4, 2014, 6am PDT
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Jesse Richmond

There have been numerous posts about San Francisco failing to properly address its housing crisis and, in fact, often making it worse. While I, and others experienced in planning and development, can continue to draw attention to this impasse, it raises the question whether there is a solution to the cost of housing in the Bay Area outside of San Francisco. While San Francisco gets most of the attention on this issue, the East Bay city that could embrace much needed density and development is Oakland.

Regional Housing Demand

By and large, those moving to the Bay Area are Millennials and the much-derided “tech” professionals. In fact, 2012 Census numbers show that the largest age group by percentage in San Francisco is those between 25 and 34 years, comprising almost 22 percent of the total population (2012 Census). These new residents are young, educated, and urban. They seek walkable neighborhoods and lively activity. They are less likely to own a car and more likely to take transit. While commuters can access the Peninsula by Caltrain to a certain degree, this subregion lacks the transit infrastructure and built form to support the type of urban lifestyle desired by young tech workers and Millennials. San Francisco, California’s most dense and urban city, is a natural draw compared to the low-density cities of the Peninsula. But therein lies part of the problem for San Francisco.

San Francisco’s current housing dilemma gets all the attention, but local market costs are very much a regional issue. Cities are no longer isolated and their political boundaries are increasingly irrelevant. Cities are dependent on each other. Workers who live in one city may commute into another. They may shop in another. They may go out to drink and eat in another. The housing supply in one city affects the demand in another. The new metropolitan paradigm is one where we must consider the existing and future conditions of the metropolitan’s central cities comprehensively, rather than separately.

San Francisco must build more housing supply, but the cities around San Francisco also have a responsibility to increase the region's housing stock, and they have yet to do so. The cities south of San Francisco are obvious culprits. Cities in San Mateo and Santa Clara counties have balked at building more units, despite the fact that they seem trigger happy on commercial (read: workplace) construction, forcing many would-be residents to move to neighboring cities, such as San Francisco. Even worse is that this impasse, as explained by the Washington Post, actually hurts the economy for everyone.

Across the Bay, Oakland hasn’t seen the same level of development activity as San Francisco—yet, with a location that’s arguably better, it really should. Oakland is in an excellent position to absorb a large chunk of the demand for new residential units, both locally and regionally, if city and community leaders accept the challenge and opportunity. Oakland’s central location in the Bay Area and plentiful transit options, both local and regional, make it a logical home base and hub for commuters, offering easy access to jobs in San Francisco and throughout the Bay Area.

Oakland is Ready

If we are willing to accept that the housing market is both local and regional, then it’s time we begin to look beyond San Francisco and appreciate Oakland’s obvious and enviable position to absorb regional demand.

Underdeveloped and Ready

Oakland is larger in land size than San Francisco, with less than half of San Francisco’s population and about 40 percent of its density. Downtown Oakland, for example, is incredibly under-developed. When you combine the general Downtown Area with Jack London Square, the total population is a paltry 19,000 (approximate) inhabiting an area approximately 1.5 square miles, representing less than 5 percent of Oakland’s total population. Compare that to the South of Market (SOMA) neighborhood in San Francisco, a neighborhood approximately 1.4 square miles in size that has a population of approximately 31,000. For those who have a visceral reaction to tall buildings, my current city of residence, West Hollywood, is a city of a little less than two square miles with a population of approximately 35,000 and very few high-rises.

New, high-density development could be delivered in this area while still preserving much of Oakland’s urban form. The small size of this combined area means that it represents less than 2 percent of Oakland’s 78 square miles. Land use regulations could easily guide the highest density developments toward the Downtown core and transition to lower density on the border of adjacent neighborhoods, creating a predictable and comfortable transition in both density and height.

Further, what makes this area of Downtown Oakland contextually well suited for new, denser development are the hard natural and man-made edges, such as Lake Merritt to the east, highways to the west, and the harbor channel to the south. While freeways are far from an ideal neighborhood boundary, what distinguishes great cities from others is how well they utilize what they have and how well they turn a setback to an advantage. Land alongside these hard edges could allow higher density as the hard border helps delineate adjacent neighborhoods. Where the soft border occurs to the north along Grand Avenue, appropriate transitioning of both height and density could mitigate sharp differences.

Permitting is easier

While I won’t pretend Oakland is by any means an easy place to develop real estate (I mean there isn’t really such a place in the Bay Area), in comparison to the entitlement battlefield that is San Francisco, permitting in Oakland is more predictable. Most importantly, unlike San Francisco, not all permits are discretionary (which is a part of San Francisco planning that still boggles my mind). Administrative permitting reduces the onerous and costly requirements of environmental review as well as the potential for obstructionism, thus helping to lower the risks and costs of development.

Minor tweaks to the existing land use regulations, such as increasing urban residential height and density maximums, reducing parking requirements, and expediting the entitlement process could attract more development to Oakland. Such development could result in the construction of thousands of new units, bringing good paying construction jobs that could be offered to local residents.

Bigger, Cheaper, Flatter

There isn’t much more to say. Oakland is bigger, cheaper, and flatter than tiny, pricey, and topographically complicated San Francisco.

Mature and diverse urban form

The diversity of Oakland’s urban form means that there is something for everyone and that new buildings will only add to the eclecticism. Downtown Oakland is primed for more high-density development clustered around three BART stations and is already enjoying a renaissance of vibrant street activity. The lakefront on the Civic Center side of Lake Merritt presents an opportunity for high-density luxury development that enjoys beautiful views of the lake and mountains to the east. Jack London Square has the promise to become one of California’s great urban waterfront neighborhoods by embracing its neighboring port as a contrasting aesthetic amenity, rather than nuisance, in the same vein as development in the Gastown neighborhood of Vancouver looks over the city’s port and rail yard (Hipsters love the machinery of consumerism, because irony.) The neighborhood would even further benefit should the Oakland A’s construct a new stadium nearby, along with an improved ferry terminal and Amtrak rail station.

Existing Local and Regional Transit

Oakland’s existing transportation infrastructure, central location in the Bay Area, and proximity to San Francisco make it a natural hub of activity and logical location as a home base for workers. Existing BART service covers the vast majority of Downtown Oakland, where most residents live within one-third of a mile from one of three BART stations. If the area bordered by Grand Avenue, I-980 and I-880, Laney College, and Lake Merritt were to be upzoned, you could potentially add thousands of units in a well-served urban center that has its own ancillary uses and services, with quick service to jobs in San Francisco, to boot.

More development in Jack London Square could likewise take advantage of the existing ferry terminal to provide access to jobs in both San Francisco and in Marin County.  The Amtrak station, less than 1,800 feet from the ferry terminal, offers a connection to jobs in the South Bay and to communities in the Delta and the Central Valley.

Cost of Housing Increasing

Cost of housing in Oakland is increasing (Zillow, Trulia), both in rents and sale prices. Higher costs of housing make it more difficult for people to rent or buy. Yet higher housing prices reflect the increasing desirability of Oakland and could attract development and investment that could help revitalize the city and generate new revenue. Properly harnessed, this new economic activity and tax revenue could help tackle some of Oakland’s more intractable social problems. Spillover demand from San Francisco and the South Bay could be the spark that ignites a greater renaissance of Oakland.

Getting the Ball Rolling

Oakland needs a catalyst project to show developers and investors that the city is serious about development. The new Oakland A’s stadium proposal is one potential catalyst project that has made the rounds in local news. But another simple project, a grocery store, would prove to be a great investment as well to lure new development.

Oakland A’s Stadium

The proposal to construct a new A’s baseball stadium adjacent to Jack London Square (pictured below) could quite possibly trigger a building boom in the Downtown area, if the city is willing to provide the necessary infrastructure investment and development incentives for stadium developers—while avoiding direct public subsidies, which shouldn’t be necessary. I won’t get into the specifics because the stadium idea remains preliminary and the details go beyond the scope of this post. Nevertheless, the right investment in this neighborhood could spark Oakland’s next renaissance, driving the development of housing that gives the region the breathing room San Francisco can’t seem to give itself.

New Grocery Store

Over the years I have developed an appreciation for grocery stores as development tools. The manner in which a new grocery store can liven up both neighborhood and development activity is impressive, especially in areas where no groceries existed before. Oakland lacks major grocery store chains in several neighborhoods, such as West Oakland and Downtown (not counting the Smart & Final located Downtown, which is more of a small warehouse grocer, and the new Whole Foods, which is technically outside of Downtown).

A major grocery store chain may be reluctant to move into Downtown Oakland for any number of reasons, many of them likely unjustified. When Ralph’s Fresh Fare opened in Downtown Los Angeles in 2007 (pictured below), it had been 50 years since a major supermarket had opened in the neighborhood. In 2006, a year before the store opened, the total population of Downtown Los Angeles was approximately 28,900 across less than six square miles. Ralph’s didn’t even want to move in and only did after the company was lobbied heavily by Los Angeles officials.  Today, the Downtown Los Angeles Ralph’s is one of the highest grossing stores in Los Angeles.

Downtown LA Ralphs

By comparison, Downtown Oakland’s population today is far denser (over 12,500/sq mi) than Downtown Los Angeles, both in 2006 (5,000/sq mi) or today (9,000/sq mi), yet no grocery store exists. As Los Angeles did, Oakland officials should lobby hard to lure a major grocery chain, such as Safeway, to this new urban location. Like the Downtown Los Angeles Ralph’s, the latent demand for a grocery store is so strong in Downtown Oakland that any major grocery store will likely enjoy high returns on the development investment. Further, the addition of a major grocery chain in Downtown Oakland will help catalyze additional residential development as it solves the chicken and egg question regarding neighborhood amenities and residential development. It would also show developers that Oakland is serious about developing the Downtown Area for residents and helps the financial backers of developers issue loans, a key step to new development.

Embracing Benefits

Building more housing—even for profit—has long been a public good, creating much of the supply in the U.S. that we live in and love today. New infill development in Downtown Oakland would add a larger tax base that could share the burden of replacing and upgrading existing infrastructure while providing addition community benefits—improved sidewalks and streetscape, improved transit, street cleaning, community safety, neighborhood events, and more—to improve the quality of life. Studies have shown that this approach to development provide cities with returns that greatly exceed their costs in terms of utility systems and city services.

Further, a new and larger tax base could also help minimize displacement of current residents, such as adding to an affordable housing development fund. More importantly, in the absence of redevelopment agencies, an appropriately structured fund could leverage its money to expedite the construction of new affordable units.

Oakland’s Turn

San Francisco gets a lot of the attention, but it’s time we give the city of Oakland a serious look. Developers and development are often scapegoated as the vanguard of greed. At the same time, providing high-quality housing is seen an ethical imperative of today’s cities. As a community, we should not give into the fear of new development, but embrace our own capacity for genius and innovation by inviting new homes that build on the strengths of our existing communities and capturing the benefits of the future. As developers, we should take the risk to work with Oakland to build upon their existing foundation and establish a partnership that will benefit all parties over the long term.

Building more and building up in Oakland will not only relieve pressure on San Francisco, but also provide numerous benefits. The end result can be a more vibrant Downtown Oakland that better serves the needs of local residents and establishes the city as a leading regional partner.

It is, as I’ve said, time to look at Oakland.

Reuben Duarte's picture

Reuben Duarte

Reuben Duarte is a Land Use Planner at Sheppard Mullin in Los Angeles, California, where he assists real estate developers, property owners, and other business entities in guiding their projects through the entitlement process, including permitting, re

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