by Denim Ohmit, Urban Justice Design Fellow at The Dellums Institute for Social Justice
Oakland’s small, locally-owned businesses reflect the qualities that make our city so special: 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 work hard to strengthen the neighborhoods they work in. They lead the way in hiring local residents and young people, using sustainable practices, and recirculating money in our local economy. Oakland simply wouldn’t be Oakland without small, local businesses.
As Oakland’s economy changes rapidly with the arrival of new residents, big developments, and major infrastructure investments, we must ask: will small businesses win or lose from this growth? On first glance, Oakland’s “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 end up pushing them out of Oakland unless the City takes action to protect them.
“Our small-scale, neighborhood-serving businesses are the most at risk of displacement: no matter how successful they might be, many of our corner stores, hairdressers, and small restaurants simply cannot run the type of profit margins to contend with doubling and tripling rents
Research indicates that increased infrastructure investment drives property values and demand for commercial space upward. As a result, commercial rents rise. Average market retail rents across Oakland have risen nearly 20% from January 2014 to March 2016, with West Oakland experiencing a dramatic increase of over 35%. 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. Because of state law, commercial tenants have no protections from unconstrained rent increases and evictions. In a hot commercial rental market, small businesses have very little leverage 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. Our small-scale, neighborhood-serving businesses are the most at risk of displacement: no matter how successful they might be, many of our corner stores, hairdressers, and small restaurants simply cannot run the type of profit margins to contend with doubling and tripling rents.
This is a tragedy for small business owners who have invested their lives and savings into their ventures, only to have their success destroyed by an unconstrained real estate market. It is also a devastating loss for their customers and our neighborhoods. From the Latino mercados in the Fruitvale to the Ethiopian restaurants in North Oakland, community-serving businesses are cornerstones of our communities, and their loss will only further the decline of Oakland’s cultural diversity. Losing long-time small businesses means losing the heart and soul of Oakland.
“Oakland’s small businesses deserve to have clean, vibrant, and safe commercial areas, especially our long-neglected corridors in East and West Oakland. This can be accomplished without displacement if the City is willing to take a more thoughtful approach to investment, one that invests in small business stability as well as new development.
This is not to say Oakland should not be investing in improving our commercial areas. Oakland’s small businesses deserve to have clean, vibrant, and safe commercial areas, especially our long-neglected corridors in East and West Oakland. This can be accomplished without displacement if the City is willing to take a more thoughtful approach to investment, one that invests in small business stability as well as new development. There are models the City can learn from: 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 incentivize the inclusion of affordable commercial space in new commercial developments. Salt Lake City’s successful “Buy Your Building” program can be replicated here 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 tosupport 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, but what’s missing in Oakland is the political will to advance them. Unfortunately, Oakland leaders missed a golden opportunity to include any of these strategies in the upcoming $600 million Infrastructure Bond.
Moving forward, it is crucial our leaders recognize the need to protect our longtime small businesses from displacement. Spurring that recognition will require our small business community and its loyal customers to come together and demand action from our elected leaders before it’s too late.