What Recovery Looks Like – Oakland

Timothy L. Coyle
Consultant specializing in housing issues

Skylines emerge. Neighborhoods are transformed. And, life is forever changed.

Count on all that happening when new development comes to town. And, yes – rents rise, too. Sometimes rising rents will displace existing residents, sometimes they won’t. But, to be sure – as time marches on so does growth, and all that it brings to communities, old and new.

Oakland is currently in the throes of change brought on by growth. It had to happen. Job increases across the Bay have for decades been putting pressure on surrounding housing markets. However, when rents in San Francisco failed to accommodate higher housing costs – particularly the cost of entering those markets – developers and investors started looking elsewhere.

Alas, eyes fell on Oakland. For a long time, Oakland was not a place to put new housing, though. Little sense of “community” and failed political leadership were constants but a steady rate of violent crime succeeded at keeping development at a distance. The crime rate hasn’t changed much but the Bay Area housing market sure has. Indeed, while San Francisco has continued a jobs surge – creating substantial residential demand – the market couldn’t keep up.

Now, Oakland is experiencing the building boom San Francisco couldn’t produce. Construction cranes crowd the skyline and scaffolding-shrouded towers occupy the downtown area. Even in the City’s western neighborhoods – previously devastated in 1989 by the Loma Prieta earthquake and a true no-man’s-land for developers – housing is finally going up amid the neighborhood’s artisan and multi-cultural surroundings.

“The City is being radically reconfigured,” said urban geography expert and UC Berkeley professor emeritus Richard Walker.

Oakland definitely sees new housing in its future. The City has permitted a staggering 9,710 new homes since 2016, more than twice as many as during the prior nine years when then-mayor Jerry Brown was desperate to start a housing renaissance. And, for the most part, Bay Area dwellers like what they see. Comments a new young professional who moved across the Bay in search of cheaper housing, “the moment I moved here, the nightlife downtown started to take off. No one goes to the city (San Francisco) anymore, because there’s so much going on in Oakland. It’s definitely becoming hipper and cooler.”

Higher rents made this new development possible but builders say that as projects are completed, supply should go up and prices could come down. “Over the next three years we’re finally going to see more balance between tenants and landlords, because there’s going to be so much more supply coming online,” said Michael Ghielmetti, president of Signature Development Group, a company active for a long time in Oakland’s transformation.

Theoretically, that should do the trick. Yet, as existing neighborhoods will surely change as a result of new development, City leaders will be forced to deal with the inevitable, thorny consequence of increased tension between the community’s haves and have-nots and the inevitable shelter squeeze involving the City’s most vulnerable.

They will face a tall task, requiring a hands-on approach and deft negotiating skills. Restoring the vanquished state redevelopment program – which includes a healthy relocation benefit for displaced residents – would go a long way to curing some of these problems, by the way.

But, while gentrification may sound devilish to some like it or not it represents an infusion of capital to help clean things up and make housing more decent and safe. Leaving attractive but economically depressed markets to fend for themselves is bad policy. Furthermore, no one benefits from a region’s under-supply of housing and struggling neighborhoods.

Urban decay spreads and Oakland is a great example of how bad things can get. Crime still dominates in many parts of the City and it will continue until there is no one left to prey upon or the situation otherwise becomes too uncomfortable for the criminals. The sooner that happens, the better for all of us.

Meanwhile, the forces of the market will remain at work. Hopefully, the embrace the City of Oakland gives them will continue to be a warm one.

 

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