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DOWNTOWN OAKLAND’S RETAIL SCENE REVIVING

By Rick DelVecchio

Downtown Oakland is no longer associated with crime and blight.

OAKLAND, Calif. — Downtown Oakland is waking from the dead. One sure sign is the smell of coffee.

Cafes are popping up from Jack London Square at the historic foot of Broadway to Auto Row at the opposite end of the city’s commercial spine. They reflect Oakland’s growing daytime population, which itself is a function of office spillover from San Francisco and Silicon Valley. The cafes also foreshadow the slow rebirth of a stable retail economy downtown. At the hub of trolley lines, Oakland long served as the retail center for the urbanized region east of San Francisco, but the big stores were almost all gone by the early 1980s.

Third Street Grind, Oaktown Cafe, Fesqua, Tully’s, Bulldog, Anselmo’s, Mojo: The cafes, patronized by the day crowd, are being joined by watering holes and clubs for the night crowd, places with a young, hip attitude, like Radio and Indigo. Radio used to be McNally’s, a blue-collar joint near the old Oakland Tribune pressroom. Years ago, when Oakland was a thriving transportation and wartime production center, Indigo was Sweet’s Ballroom, a stopover for the nation’s finest traveling bands.

Oakland is at the beginning of its retail renaissance. The city of 400,000, which houses a disproportionately high number of the region’s poor, remains a struggle for the small business owner. But downtown Oakland is no longer a term associated with crime and abandonment, and more business owners feel their struggles will pay off.

Dee Ferris, who owns Third Street Grind, serves the old economy and the new: government workers and dot-comers. She is hoping the wave will grow before her rent costs rise. She is pleased that a Latin dance club is opening down the street and that hundreds of lofts are under construction in nearby Jack London Square.

“All you do is hang on,” she said. “I’m just waiting for the day when all the big chains come because they realize how hot the area has become.”

Some 14 blocks away, uptown from City Hall, Thang Nguyen’s Fesqua cafe caters to government workers who use a nearby gate to the Bay Area Rapid Transit commuter rail system. Hundreds of residential units are planned for Nguyen’s Telegraph Avenue neighborhood. Nearby, on Broadway, one of the city’s tallest towers — offices capped with residential — is soon to break ground.

The city is restoring the huge, cascading “Oakland” sign on the national-landmark Fox Theater, and one developer is pitching a plan to pay for the restoration of the Fox by twinning the project with luxury condos.

Across Telegraph Avenue from the Fox, a couple of young, ambitious Oaklanders in their 20s, Omar Krashna and Shawn Granberry, are turning the long-abandoned J.J. Newberry store into a retail and entertainment arcade they call Millennium Village. They are using their own money and relying on their contacts in the business and music communities to line up such tenants as a record store and a restaurant.

Krashna and Granberry are working with investors who believe that only a lack of good ideas and retail experience are holding back the nearby stretch of Broadway from becoming as vibrant as New Orleans’ Bourbon Street.

“You do the right kind of marketing, you can have Bourbon Street anytime,” said Manjit Chadda, who has operated clubs, restaurants and hotels in the United States and Europe. But only a few years ago, Broadway was so dead that the city had to hire artists to fill the vacant storefronts with sculpture and painting.

“I think this block is going to come back in the next few years,” said Nguyen, who has the resources to hang on for the ride. He is a contractor, and his two sisters work the counter.

Nearby Emeryville used to be known as the city that could turn a deal. Oakland was the city that turned in circles. But Oakland’s reputation has become more like that of Emeryville, under a city administration that is recruiting businesses and dusting off abandoned and underused property, and a mayor, Jerry Brown, who two years ago made a campaign pledge to bring 10,000 new residents to downtown within five years.

Citywide, Oakland has drawn 300 new companies and 10,000 new jobs, many of them technology businesses, such as Ask Jeeves, DoubleTwist, Morgan Stanley Dean Witter online and Zhone Technologies. Sixty development projects are under way.

Downtown, 7,000 residential units are under construction or pending. They are market-rate, high-income homes — exactly the kind Brown pledged to attract in a gambit that was really about responding to voters who pined for stores downtown like the old days. There are signs that the strategy is beginning to work. City Manager Robert Bobb said a Gap store would open next year on Broadway. The historic Rotunda, which housed department stores for generations before it fell vacant and into the city’s hands, is also set to open as a mixed-used complex — the result of a collaboration between the city and private developers.

Office vacancies in Oakland are at an all-time low. Three million square feet of office space will be added over the next few years, much of it in two new downtown towers. Driving office development is the price differential with San Francisco.

“If you’re going to rent Class A office space, rents are anywhere from $75 to $110 a square foot in San Francisco, whereas in downtown Oakland you can rent the same space for $50 to $55,” said Oakland developer John Protopappas.

City officials and economists classify Oakland as a spillover city, like Brooklyn; Tacoma, Wash; and Jersey

City, N.J. At a recent business conference, Mayor Brown used water imagery to describe the effect: Money is like water, and it is sloshing through Oakland at a high velocity.

In a column for ReiSource America, a New York City-based real estate research firm, Joel Kotkin, a senior fellow with both Pepperdine University’s Davenport Institute for Public Policy and the Milken Institute, said Oakland has become one of the nation’s 10 fastest-growing metropolitan areas. Kotkin said Oakland is now home to more than 300 high-tech firms.

The impact of the spillover economy also extends to old industrial areas near Oakland’s airport and seaport, where vacant land is being converted to offices and hotels. Buyers have paid record prices for prime locations near the airport and on the optical cable nexus that runs under the streets of the West Oakland waterfront. According to ReiSource America, demand for industrial space in Alameda and Contra Costa counties, in the urban belt east of San Francisco Bay, has erased the losses of the 1988-94 downturn.

Cafes and clubs will no doubt continue to emerge in downtown Oakland. But a truly vibrant retail economy may be a long time in coming. Realizing Brown’s vision of 10,000 new residents downtown is going to be difficult because there is such pressure to convert buildings to offices, Protopappas said.

“That’s not going to happen for awhile,” he said. “Daytime people are not enough. We effectively have to create more of a neighborhood. The problem is that retail is always going to be the last item that sees the increase in values.”

Rick DelVecchio is a reporter for the San Francisco Chronicle.

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