OAKLAND, Calif. -- Sleek new condos rise up amid the graffiti-covered warehouses, artist's studios and homeless encampments of West Oakland. Construction cranes dot the downtown skyline, and scaffolding-shrouded towers march down Broadway into Temescal.
An extraordinary residential building boom is shaking up Oakland, part of a transformation sweeping the Bay Area as market forces and political initiative combine to address the region's desperate housing crisis.
"The city is being radically reconfigured -- the whole Bay Area is," said urban geography expert and University of California, Berkeley professor emeritus Richard Walker. "The Oakland we knew is not going to remain."
The change is particularly stark in Oakland, where developers and investors began clamoring to build after decades of dismissing the city as dangerous and crime-ridden. Oakland has permitted a staggering 9,710 new homes since 2016, more than twice as many as during the prior nine years. But the construction of those new dwellings -- creating hip, trendy neighborhoods for newcomers while pricing out old-timers -- is exacerbating the divide between the city's haves and have-nots.
Other cities are struggling with the same tensions.
In East Palo Alto, long thought of as the blue-collar cousin to ritzy Palo Alto, the median sale price of a home has risen 80 percent since 2015, according to Zillow. In parts of downtown San Jose, low-income residents fear the proposed Google campus of 20,000 employees will price them out. And in San Francisco, an influx of tech companies and their workers has helped push rents into the stratosphere, driving some residents to Oakland in search of cheaper housing -- which in turn inflates rents in the East Bay city.
Adam Kleinberg, who moved from San Francisco eight years ago in search of cheaper housing, has enjoyed watching his new town change around him.
"The moment I moved here, the nightlife downtown started to take off," said 47-year-old Kleinberg, who runs an advertising agency in San Francisco and owns a home in the Oakland Hills. "No one goes to the city anymore, because there's so much going on in Oakland. It's definitely becoming hipper and cooler."
HIGH-RISE APARTMENTS
The building boom is altering Oakland's skyline, ushering in a new wave of high-rise apartment buildings. Towers in the works include a 33-story building at Broadway and 17th Street, a 40-story building at 1314 Franklin St., and a 23-story building on Webster Street. Construction crews broke ground in May on the 24-story Skylyne at Temescal tower next to the MacArthur BART station.
Those developers have a big incentive to build -- Oakland rents have spiked nearly 25 percent since 2015, according to RentCafe, and home prices have jumped almost 40 percent, according to Zillow. But as projects are completed, supply should go up and prices could come down.
"Over the next three years we're finally going to see more balance between tenants and landlords, because there's going to be so much more supply coming online," said Michael Ghielmetti, president of Signature Development Group and Oakland director of city planning and research association SPUR.
Cities throughout the Bay Area are struggling to keep up with the demand to live here, and to make up for years of failing to build enough housing, but the amount of construction they are willing or able to approve varies widely. Oakland permitted 4,284 new homes in 2017, up from 2,121 in 2016. San Jose permitted 2,712 new homes in the 2016-2017 fiscal year, down from a five-year high of 4,724 in the 2013-2014 fiscal year. San Francisco permitted 6,731 new homes last year, a 20-year high.
But permitting is just the first step -- projects a city approves may not get built right away, or ever, if the developer runs out of funds or faces other delays. To keep pace with the demand in Oakland, developers need to build an average of 2,125 homes a year for the next eight years, according to a 2017 report by the city's Housing Cabinet. As of July 31, there were 884 homes completed so far this year.
The building boom and resulting gentrification are squeezing the city's most vulnerable. After living in Oakland his entire life, 54-year-old Marcus Emery recently found himself homeless for the first time. His landlord died about three years ago, Emery said, and the new owner wanted to raise the rent beyond what he could pay. Emery, who already was behind in payments because of admittedly poor financial decisions, was evicted from the house in West Oakland he'd called home for almost two decades.
"It still hurts me when I go by there now," he said.
After spending time in one of Oakland's many sprawling homeless encampments, Emery moved into a community of Tuff Sheds the city set up on Northgate Avenue to house the homeless, and is working on finding permanent housing.
SUBSIDIZED HOUSING
In 2016, Oakland Mayor Libby Schaaf promised to build 17,000 new housing units in the next eight years -- 28 percent would be subsidized, low-income housing -- and preserve another 17,000 existing homes as low-income rentals. So far, Oakland is on track to meet its overall goal, but is falling short in its affordable housing mandate. Of the 6,982 new units under construction as of July 31, less than 6 percent were reserved for low-income residents.
Oakland officials say they have to work harder to find money for affordable housing. In 2011, the state axed redevelopment agencies, depriving Oakland of about $37 million a year in affordable housing funds, said Housing and Community Development Director Michele Byrd.
The city has found new sources of funding -- including a real estate fee approved by state legislators last year, affordable housing bonds and an affordable housing impact fee that took effect in Oakland in 2016 -- but has yet to come up with a "cash cow" to replace redevelopment agency funds, Byrd said. The city also has expanded its focus to include buying existing buildings and keeping them affordable, working with organizations like Oakland Community Land Trust, in addition to building new units.
Zane Burton, who moved to Oakland after getting priced out of San Francisco about seven years ago, now worries rent increases will push him out of Oakland, too. As prices go up, Burton, who is African-American, says everyone who looks like him is leaving his Lake Merritt neighborhood.
The fast-paced changes also are troubling for some of Oakland's small-business owners.
For Bob Tuck of Atlas Heating and Air Conditioning, whose family has run the business in the same West Oakland building for more than 100 years, watching the blocks around him change is nerve-wracking. The area is becoming more residential. Most recently, developer oWow , which converts blighted building into trendy co-living spaces, bought the abandoned sausage factory on Adeline Street. Tuck worries about pressure from new neighbor who might not appreciate the loud noises, streams of delivery trucks and other disturbances that go along with manufacturing. "It's sort of our own version of global warming," Tuck said. "We're all going to be flooded by the rising sea of residential development."
SundayMonday Business on 08/17/2018