By Jack Stubbs
In a post-pandemic era defined by uncertainty, it can be difficult to ascertain the current – and projected health – of the residential, commercial or retail submarkets in some of the nation’s typically-most-active regions.
However, the future of Oakland’s retail market looks to be poised for a bright future, according to “Oakland Submarkets Retail Overview,” a first quarter 2021 report published by Walnut Creek, California-based real estate agency John Cumbelich & Associates. The report provides an overview of the city’s major submarkets — Grand Lake, Rockridge, and Montclair Village – at the beginning of the year.
“In most markets unlike Oakland, a retail survey would study suburban shopping center occupancy and vacancy…but being on a pre-retail shopping era paradigm, Oakland doesn’t have that same robust population of traditional neighborhood shopping centers,” said John Cumbelich, founder and CEO of the firm.
The report identified a slight rise in vacancy levels, as the post-Covid recovery in retail leasing cools. Overall, vacancy in the combined Rockridge, Grand Lake and Montclair Village submarkets rose marginally, from 5.34 percent in fourth quarter 2021 to 5.83 percent in first quarter 2022.
The three submarkets identified in the report serve as a notable bellwether for studying the overall health of Oakland’s retail market, even though the market is more unique by traditional standards, explained Cumbelich, especially when compared to the nearby neighborhood city of Walnut Creek.
“Each quarter, we monitor the occupancy and vacancy levels in the Grand Lake, Rockridge and Montclair Village districts, which are three of the more competitive, high-quality venues in Oakland for retail and dining,” he said. “It’s important to note that what these three areas largely lack are what we would call traditional anchor tenants.”
Oakland’s three premier retail districts have 825,000 square feet of retail inventory, which is comparable to Walnut Creek’s regional mall area, states the report. However, these three neighborhoods outperform Walnut Creek and other Bay Area submarkets’ desirability, largely due to increased residential density, incomes and job growth creation, which have had a substantial knock-on effect on the submarkets’ occupancy and rent levels.
Rockridge, which has just over 227,000 square feet of retail inventory, posted occupancy and average rental rates of 97 percent and between $36 and $60 average rents, according to the report. Totaling just over 297,000 square feet of retail inventory, Montclair Village had an occupancy rate of about 92 percent, with average rents ranging from $36 to $60. The Grand Lake neighborhood, encompassing nearly 323,000 square feet of retail inventory, had an occupancy rate of around 94 percent and rents ranging from $42 to $60 per square foot.
Although the retail submarket figures were notable in their own right, these numbers didn’t necessarily indicate broader trends in the national retail market – especially considering the ongoing post-pandemic recovery.
“In terms of what we saw in the first quarter, I’d say that activity was a little up and a little down, it wasn’t terribly decisive in terms of what we saw in these three districts,” Cumbelich said. “In Grand Lake, we’re still around 94.5% occupancy, which by national standards is above average occupancy level,”
According to Cumbelich, the submarkets studied represent a unique advantage over other neighborhoods from a retail perspective due to the relatively smaller blocks of space available.
“This is good from the standpoint that there’s a lower barrier to entry, whereas in a more suburban market, there are 10,000 to 30,000 square-foot spaces available…these three areas are much more heavily characterized by 1,000 to 3,000 square-foot [retail] spaces.”
Subsequently, one of the main trends that characterized first quarter 2022 was a tendency towards repositioning of assets due to logistical constraints, such as the McCaulou’s department store, a roughly 20,000 square-foot building.
“[It] has virtually no parking, and located at the end of a cul-de-sac, which is a bit of an unorthodox location….it’s currently being reimagined by the owners, who are trying to remodel it and turn it into multiple spaces so that it will have a better chance of capturing some tenant leasing traction,” Cumbelich explained.
In spite of the somewhat uncertain state – and period of flux – of Oakland’s retail market, there were several notable additions to the local retail landscape. Whole Foods opened a second Oakland location on Telegraph Avenue, which hopefully bodes well in terms of the city’s retail character.
“This brings a high-quality grocer who’s in support of Oakland. But it’s even more noteworthy because they have another Oakland store by Lake Merritt. Clearly, from what they’ve seen there during the last six to seven years is that they want more Oakland,” Cumbelich added. “They’re voting with their capital investment to double-down on the Oakland audience, which is a great affirmation, in my opinion, of the Oakland trade area.”
Elsewhere, Kissel Uptown Oakland – part of the Hyatt brand – debuted on Broadway, while Home Depot announced its intentions to seek approval at The Ridge, a shopping center located at 5100 Broadway. Pomet and Roji Ramen add to an already-crowded field of restaurants on Piedmont Avenue, and Otto’s Coffee + Donuts + Beer opened on Broadway at the Kissel Uptown, the report notes.
As is the case for many of the country’s commercial and retail submarkets, the question remains to what degree the post-pandemic recovery period will impact retail activity in Oakland, explained Cumbelich, who thinks that Oakland is well-positioned – literally and otherwise – to ride out the storm.
“Oakland is a community that is well-positioned to benefit from the work-from-home dynamic. It’s important to remember that Oakland is geographically in the center of the Bay Area and has the best weather in the Bay Area…it has highway infrastructure that you can get to and from anywhere easily. So, there are all kinds of latent advantages to being in Oakland from these convenience standpoints.”