What would you put in an empty storefront?
One out of every four storefronts in downtown Oakland is currently empty. Along with our friends at the Oakland Lowdown, we’ve been trying to find out why – and imagine what resources could be there instead to support our community.
What we’re dealing with now started around 2020, when the COVID-19 pandemic emerged.
2019 was a memorable time in Oakland’s modern history. At some point, it was even named one of the most exciting destinations in the world.
But everything changed when the pandemic hit. All of a sudden, businesses that relied on constant foot traffic couldn’t get people in the doors. Newer residents felt scared and unfamiliar with the new setting; older residents, like those in the Housing Authority or senior living facilities, found that many of the businesses left weren’t meeting their needs or budgets. Quickly but persistently, life on the streets began to peter off and storefronts emptied out.
The pandemic caused a big shock to Downtown Oakland’s real estate market, especially compared to Oakland’s 2019 high.
Foot traffic dove due to stay-at-home and work-from-home policies, which generally makes it hard for small businesses to survive.
Buildings that were purchased at higher prices (cost-basis) were locked into high mortgage payments that the income from a small business tenant could no longer sustain.
Some landlords reduced rents in response, but many keep their rents fairly high and business is generally hard for everyone. Storefront tenants start to leave.
The increase in crime (bipping, break-ins) in 2022-23 also increased the “risk” of investing in Downtown Oakland in the eyes of lenders, insurers, and some residents.
If things weren’t already bad, this also discouraged a lot of businesses that might have otherwise chosen come in.
Lenders jacked up their interest rates because they didn’t consider Oakland a safe place to invest – this made it hard for small businesses that would have stuck it out to find affordable means to get started.
Insurance companies (for both buildings and business) also started raising their premiums because of the perceived risk as well. These costs are typically passed down to the small businesses through the common “triple-net leases,” so this likely made it even harder to get started.
Break-ins and other property crimes have gone down significantly in the past year or so. But still, these perceptions have a very real and significant effect on the behaviors of all people involved – potential tenants, lenders, insurers, and residents.
Meanwhile, few property owners are giving small and local businesses, artists, and others the space to serve their communities.
Ultimately, the decision to leave a storefront empty belongs to the property owner; as one of them told us, “everyone is playing their own game.” A few (like owner of the White Building on 15th) make it a priority to fill their storefronts even if they aren’t making a lot of money from it, which gives art galleries, music venues, and other community-run spaces an opportunity to bring life to the streets. But many others landlords don’t consider it their responsibility to keep their storefronts filled, and don’t want deal with the difficulties that can come with tenants. Many refuse to take on a short-term loss in income, and would rather wait until they can lock in a higher-paying tenant for a longer period of time (commercial leases are usually 5-10 years long).
So, where do we go from here?
It’s possible that the market “turns around” fairly soon. Loans for many of the buildings purchased just before the pandemic (when prices were high) will probably balloon in the next year or two, and property owners will be forced to sell their properties at lower costs. With some of that activity, some of the dormant property owners might find it easier to rent their properties as well.
But why should the communities that live in the area have to wait for that? Many of these storefronts have now been empty for 2, 3, 4 years, or even longer. Meanwhile, the area still lacks basics like fresh produce, supply stores, pharmacies, and other things that people will go elsewhere for. Couldn’t these be filled with resources that people need to live a full and comfortable life? Isn’t filling the storefronts an essential part of downtown Oakland’s recovery, and one that could provide a livelihood for many of the city’s residents?
If you’re a small business owner, a local nonprofit, or a community group that has been looking for (or recently found) space in Oakland, we’d love to hear from you as well.