By Jacob Bourne
Dramatic changes have swept across the city of Oakland since the economy recovered from the Great Recession. Numerous residents of other Bay Area locales have moved to Oakland and other East Bay cities seeking more affordable housing, and with that, thriving employment sectors have followed. The greater prosperity has stimulated demand for consumerism in the form of restaurants, entertainment, bars and shopping outlets. According to John Cumbelich & Associates Q3 2016 Oakland Submarkets Retail Overview, retail occupancy is high and rental rates are now in the same league as prime retail strongholds in Walnut Creek and Lafayette.[contextly_sidebar id=”YFX9Rx1xScCnGQntbSJwfttmDKcHKnRg”]“The single most important trend is that national retail wants to be in Oakland when in the past it was a no-fly zone,” commented John Cumbelich. “Everybody wants to be in Oakland now if they can find the right spot and environment.”
The report provided market data for Grand Lake, Montclair Village and Rockridge — three premier retail districts in Oakland — and found that occupancy rates for all three are above 98 percent. The Grand Lake District just north of Lake Merritt is in close proximity to Downtown and has strong transit accessibility and a wave of new housing inventory in the pipeline. The district has a total of 326,313 square feet of retail with average rental rates between $42 and $60 per square foot. The Rockridge retail district in North Oakland, which runs along College Avenue between Alcatraz Avenue and Broadway has 222,164 square feet of inventory priced between $36 and $60 per square foot. A section of the district north of Highway 24 to Alcatraz Avenue achieved 100-percent occupancy during the quarter. Montclair Village, a historic district on Oakland’s Eastside, attracts wealthy shoppers from the Piedmont and Montclair residential neighborhoods to its 286,730 square feet of retail. Prices here vary widely from $36 to $65 per square foot. Analysts found that all three districts surpassed Walnut Creek, Lafayette, Pleasant Hill and Danville in occupancy rates.
Cumbelich described the trends in Oakland’s retail sector as being a ripple effect of improved economic conditions in other parts of the Bay Area coupled with the reality that there hasn’t been a corresponding spike in inventory to meet the demand, especially for high-end inventory. He attributes this to a long history of limited development in shopping centers post World War II followed by many instances in which major national retailers chose to ignore the city as a potential outpost for their brands.
“Oakland is the largest West Coast City with no regional mall,” explained Cumbelich. “To this day there’s only one Target store in many East Bay towns and zero of a lot of things. Historically, there has been a lot of stereotypes and bad press about what’s happening in the city. Oakland has suffered from the bad press, much of which isn’t true.”
Now that there’s strong interest in Oakland from the nation’s top brands, Cumbelich stressed the importance of upcoming decisions on the part of urban planners and developers to creatively expand supply and effectively repurpose what’s existing to strike a balance with the growing demand.
Cumbelich anticipates high pre-leasing rates for the small amount of new inventory that’s ahead. In Montclair Village at 2080 Mountain Boulevard a total of 25,547 square feet is available for retail, office and restaurant opportunities, featuring sweeping 360-degree views from the top of the three-story building. A proposed mixed-use residential project designed by Lowney Architecture is geared to provide 3,000 square feet of retail on Lake Park Avenue at the site of a former Kwik Way.