Reconciling Oakland Gentrification and Local Business

August 19, 2016 • 5 min read

As Oakland’s economy changes rapidly with the arrival of new residents, big developments, and major infrastructure investments, many local businesses wonder if this new growth will help them—or displace them. At first glance, an Oakland renaissance may look like good news for small business owners, as it revitalizes commercial districts and brings in new customers. However, for the thousands of small businesses in rented space, these changes may mean rent hikes they can ill afford, and the Town’s revitalization may look more like Oakland gentrification.

Will Oakland revitalization mean Oakland gentrification?

Research indicates that increased infrastructure investment drives property values and demand for commercial space upward. Improve transit, schools, public spaces, and commercial rents rise. As a blog post on the National League of Cities’ site points out, “Although improving property values is a sign of a strengthening economy, it is also a double-edged sword with serious equity implications.” Average market retail rents across Oakland have already risen nearly 20 percent from January 2014 to March 2016, with West Oakland experiencing an especially dramatic increase of over 35 percent. And those numbers do not even capture the businesses facing colossal rent increases upon lease renewal. Small business owners in all parts of Oakland report doubling and even tripling rents.

According to Nolo.com, “Commercial leases are not subject to most consumer protection laws that govern residential leases.” Section 1954.27 of the California Civil Code states that “no public entity is allowed to enact or enforce any type of commercial rent control in the state.” So, commercial tenants have no protections from unconstrained rent increases and evictions. In a hot commercial rental market, small businesses have even less leverage than usual to negotiate a lower rent or request more time to adjust their business model to absorb higher rents.

Even in areas seeing no signs of increased demand for commercial space, small businesses are facing doubling or tripling rents as landlords speculate future improvements will soon bring higher-rent tenants. Thus small-scale, neighborhood-serving businesses are the most at risk of displacement: no matter how successful they might be, many local shops, like the Latino mercados in the Fruitvale, and small Ethiopian restaurants like the ones in North Oakland, simply cannot run the type of profit margins to contend with doubling and tripling rents.

oakland business

Many local residents and small business owners are concerned that losing community-serving businesses which function as cornerstones of the Oakland community will only further the decline of Oakland’s cultural diversity.

Helping local Oakland businesses

Local organizations like Oakland Grown, a program of the Sustainable Business Alliance, Oakland Makers, and ICA Fund Good Jobs believe that the city’s small, locally-owned businesses reflect the qualities that make Oakland unique: the ingenuity to make new things, the passion for artistry and creativity, and the commitment to building a stronger community. Small businesses owners appreciate that customers are also friends and neighbors, and thus have a stake in the well-being of the neighborhoods they work in. Oakland small businesses lead the way in hiring local residents and young people, using sustainable practices, and recirculating money in local economies.

Oakland’s residents and small businesses deserve clean, vibrant, and safe commercial areas. Revitalizing the long-neglected corridors in East and West Oakland, for example, would be a significant improvement for both residents and businesses. This sort of Oakland gentrification can be accomplished without displacement if the City looks at a wide variety of models for such work, models that invest in small business stability as well as new development. It can follow the lead of San Francisco and develop a Legacy Small Business grant program to help meet rent needs. Like Austin, Oakland can provide incentives for the inclusion of affordable commercial space in new commercial developments. Salt Lake City’s successful “Buy Your Building” program can be replicated in Oakland to create pathways to unit ownership for business owners who want to put down roots. The City can seed a revolving fund to offer low-interest tenant improvement loans tied to voluntary stabilization, as New York City has done for residential units. The City can leverage federal tax credits to support the acquisition and redevelopment of commercial property to create permanently affordable units. Zoning tools can be creatively employed to prioritize the preservation of neighborhood-serving small business space. There is a broad and innovative toolkit of solutions out there that cities facing gentrification and displacement can take advantage of. Perhaps these these models can create an Oakland gentrification that changes how people understand “gentrification.”

Learning Labs

oakland grownFortunately, businesses don’t have to just wait and see what local government does (or doesn’t) do. Oakland Grown will be hosting two Learning Labs next week, on August 25 (Mandela Gateway Community Room) and 26 (Youth Uprising), in order to gather information from local businesses that will help them collaborate ensuring a sustainable small, local business community in Oakland. The events are free, with a recommended $5 donation. Dinner and childcare are being provided, and there will be a resource information booth and representatives from various organizations advocating for small businesses and entrepreneurs, including TownsquaredBeneficial State and Business Alliance for Local Living Economies (BALLE).

A version of this post originally appeared on the Dellums Institute website.

Related Posts