If You Offer Free Rent, They Will Come

Oakland looks to build a downtown retail district with start-up, rent-free leases in already vacant spaces.

Yoko Kumano, owner of Umami Mart, one of the pop-up stores taking a chance on the retail potential of Old Oakland.
National Journal
Sophie Quinton
See more stories about...
Sophie Quinton
Oct. 11, 2013, 8:24 a.m.

This art­icle is part of a weeklong Amer­ica 360 series on Oak­land.

OAK­LAND—The city of Oak­land wants to emerge as the Brook­lyn to San Fran­cisco’s Man­hat­tan. It’s get­ting there. Thanks to a hip­ster ex­odus from more ex­pens­ive San Fran­cisco, Pa­lo Alto, and Sil­ic­on Val­ley, a lot of tat­tooed mil­len­ni­als are rid­ing around down­town Oak­land on fixed-gear bikes. The bar and res­taur­ant scene is tak­ing off. A massive fest­iv­al called Art Mur­mur draws thou­sands of people on the first Fri­day each month.

And yet re­tail­ers still largely struggle to sur­vive in Oak­land’s down­town. “There aren’t enough people here,” Bri­an Kend­all, pro­ject man­ager for the Oak­land Re­devel­op­ment Agency, ex­plained on a walk last month. Down­town is a ma­jor pro­fes­sion­al cen­ter fea­tur­ing Kais­er Per­man­ente’s re­gion­al of­fices, the seats of city and county gov­ern­ment, and mu­sic-stream­ing com­pany Pan­dora. But for much of its his­tory, it has been a com­muter cen­ter, with few res­id­en­tial or shop­ping op­por­tun­it­ies.

There’s not much foot traffic. Kend­all poin­ted out blocks where many ground-floor spaces are either va­cant or of­fices that turn shuttered blinds to the street. On Tele­graph Av­en­ue, a ma­jor thor­ough­fare, two new shoe boutiques rely on on­line sales for 30 to 50 per­cent of their rev­en­ues, he said. Mean­while, city of­fi­cials es­tim­ate that Oak­land res­id­ents spend $1 bil­lion each year shop­ping out­side Oak­land, of­ten tak­ing their wal­lets to neigh­bor­ing towns with already-flour­ish­ing shop­ping dis­tricts.

City hall, loc­al en­tre­pren­eurs, and a small busi­ness in­cub­at­or called Popu­p­hood see re­tail as the fi­nal stage of Oak­land’s urb­an re­viv­al. And they’re help­ing mer­chants with cre­at­ive solu­tions that could ap­ply to Main Streets and down­towns na­tion­wide.

Alf­onso Domin­guez knows how hard it is to sur­vive as a re­tail­er in down­town Oak­land. While his res­taur­ant in his­tor­ic Old Oak­land — an au­then­t­ic Mex­ic­an place he co-owns with his mom — sur­vived the 2008 re­ces­sion, his nearby den­im store and home-goods store did not. As Domin­guez watched the bad eco­nomy wipe out emer­ging busi­nesses, he wor­ried about the neigh­bor­hood’s fu­ture, and about de­creased foot traffic to his res­taur­ant.

So in 2011, Domin­guez teamed up with artist Sarah Fil­ley and ap­proached his land­lord with a new concept: in­stantly re­viv­ing a whole block in Old Oak­land by giv­ing five va­cant store­fronts to re­tail­ers for six months, rent-free. The goal was to lower the start-up costs of open­ing a store, and to help en­tre­pren­eurs ease in­to pay­ing full rent. By open­ing along­side oth­er res­taur­ants and boutiques, a store own­er also wouldn’t have to wait for oth­er re­tail out­lets to take a chance on the neigh­bor­hood. “You can’t ex­pect someone to go and set up shop in a trans­ition­al neigh­bor­hood and wait five years for it to come up around them,” Fil­ley says. Domin­guez and Fil­ley called the concept ‘Popu­p­hood,’ a word that’s now the name of their con­sult­ing com­pany.

“We didn’t feel like we were sac­ri­fi­cing much,” says Mar­tin Ward, as­set man­ager for the build­ing own­er, Peter Sul­li­van As­so­ci­ates. The com­pany had been try­ing to lease the spaces for years. Ward be­lieved that ac­tiv­at­ing ground-floor space with re­tail­ers would make the area more at­tract­ive to of­fice ten­ants.

Two years later, the store­fronts in Old Oak­land have hos­ted sev­en busi­nesses and a trav­el­ing art lib­rary, se­lec­ted by Domin­guez and Fil­ley from a pool of ap­plic­ants. They lean to­ward busi­nesses that sup­port or re­flect Oak­land’s cre­at­ive eco­nomy — such as a former gal­lery own­er who sells goods hand­made by Amer­ic­an artists, and a pair of Ja­pan­ese-Amer­ic­an life­style blog­gers whose store spe­cial­izes in im­por­ted bar­ware. Par­ti­cip­at­ing re­tail­ers meet monthly, share com­mun­al re­sources like Wi-Fi, and are ment­ored by Domin­guez and Fil­ley.

So far, two par­ti­cipants have gone on to sign leases in their Popu­p­hood spaces, and a third re­cently signed a lease at an­oth­er Old Oak­land loc­a­tion. Re­tail­ers that suc­ceed in the in­cub­at­or tend to have two qual­it­ies: they come in­to it with an ex­ist­ing on­line fol­low­ing or as a second loc­a­tion for an ex­ist­ing busi­ness, and they turn their stores in­to ex­per­i­ences. Crown Nine, a jew­el­er, hosts classes and makes cus­tom en­gage­ment rings. Um­ami Mart, the Ja­pan­ese pur­vey­or, hosts events like sake tast­ings. En­tre­pren­eurs that suc­ceed go bey­ond brick-and-mor­tar: they have on­line stores, whole­sale busi­nesses, blogs, and In­s­tagram ac­counts. They hustle like crazy.

A ven­ture like Popu­p­hood re­quires land­lords will­ing to take risks and hard­work­ing en­tre­pren­eurs. But re­tail­ers set­ting up shop in Oak­land have also be­nefited from state re­devel­op­ment funds for down­town façade and ten­ant im­prove­ments, man­aged by City Hall’s Kend­all. Such money has been stra­tegic­ally de­ployed in Oak­land for years to com­bat urb­an blight — not­ably in the 2000s, when then-May­or Jerry Brown spent lav­ishly to re­store the art deco Fox Theat­er and fin­ance new apart­ments. In 2012, now-Gov. Brown elim­in­ated the pro­gram, for­cing the city to ex­plore oth­er op­tions for help­ing en­tre­pren­eurs.

The City of Oak­land re­cently partnered with Kiva Zip, a crowd­fund­ing plat­form. The city will en­dorse loc­al busi­nesses on the site, with the hope that the stamp of ap­prov­al will help them at­tract more cap­it­al. The re­devel­op­ment agency has also taken a Popu­p­hood-style ap­proach to some down­town prop­erty it owns. That in­cludes Domin­guez and Fil­ley’s cur­rent of­fice space, which the city has offered them rent-free in ex­change for their en­tre­pren­eur-in­cub­a­tion work.

Popu­p­hood has sub­leased most of the space it gained from the city to HUB Oak­land, an or­gan­iz­a­tion that provides cowork­ing loc­a­tions throughout the city. What was once an empty bank branch is now hum­ming with en­tre­pren­eur­i­al activ­ity. Across the street, a store called Oak­land­ish prints T-shirts and oth­er gear em­blazoned with un­abashed Oak­land pride. And down the block, Awaken Cafe serves up lattes and avo­cado toast, and it’s of­ten so crowded with people work­ing on laptops that all the wall out­lets are taken.

What We're Following See More »
BIG CHANGE FROM WHEN HE SELF-FINANCED
Trump Enriching His Businesses with Donor Money
14 hours ago
WHY WE CARE

Donald Trump "nearly quintupled the monthly rent his presidential campaign pays for its headquarters at Trump Tower to $169,758 in July, when he was raising funds from donors, compared with March, when he was self-funding his campaign." A campaign spokesman "said the increased office space was needed to accommodate an anticipated increase in employees," but the campaign's paid staff has actually dipped by about 25 since March. The campaign has also paid his golf courses and restaurants about $260,000 since mid-May.

Source:
QUESTIONS OVER IMMIGRATION POLICY
Trump Cancels Rallies
22 hours ago
THE LATEST

Donald Trump probably isn't taking seriously John Oliver's suggestion that he quit the race. But he has canceled or rescheduled rallies amid questions over his stance on immigration. Trump rescheduled a speech on the topic that he was set to give later this week. Plus, he's also nixed planned rallies in Oregon and Las Vegas this month.

Source:
‘STRATEGY AND MESSAGING’
Sean Hannity Is Also Advising Trump
1 days ago
THE LATEST

Donald Trump's Fox News brain trust keeps growing. After it was revealed that former Fox chief Roger Ailes is informally advising Trump on debate preparation, host Sean Hannity admitted over the weekend that he's also advising Trump on "strategy and messaging." He told the New York Times: “I’m not hiding the fact that I want Donald Trump to be the next president of the United States. I never claimed to be a journalist.”

Source:
THE SHAKE-UP CONTINUES
RNC’s Spicer to Work from Trump HQ
1 days ago
THE LATEST

"Donald Trump's campaign and the Republican party will coordinate more closely going forward, with the GOP's top communicator and chief strategist Sean Spicer increasingly working out of Trump campaign headquarters, the campaign confirmed Sunday."

Source:
MORE PALACE INTRIGUE
Manafort Resigns from Trump Campaign
4 days ago
THE LATEST

In a statement released Friday morning, the Trump campaign announced that Paul Manafort has resigned as campaign chairman. The move comes after fresh questions had been raised about Manafort's work in Russia and Ukraine, and Trump brought in Stephen Bannon "as a de facto demotion for Manafort."

Source:
×