Oakland is in a unique position. The city, rich with history, is demographically attractive as a neighbor to both San Francisco and Silicon Valley, two of the biggest players in the tech world. So, if only for convenience, Oakland would make sense as the next landing spot for a flourishing startup scene. But to the outsider, there’s still one problem—crime—and it could be ruining the city’s chance at becoming the next big tech industry.
According to annual FBI statistics released last year, Oakland had more robberies per capita than any large US city (10.9 robberies per 1,000 residents). Homicides (92 per year), though dropping significantly, still occur almost twice as much in Oakland as in San Francisco (46) and San Jose (44), even with half the population. And a history of wealth inequality and lack of opportunity for young people have mired its path to holding ranks with the two biggest tech hubs in the world.
Still, Oakland does have potential. The city offers an attractive location for tech startups, specifically near Jack London Square. The area’s combination of urban life, vibrant culture, vacant commercial real estate, and talent from nearby UC Berkeley give it a big leg up.
Oakland's average apartment and commercial real estate rents are a far cry from those in San Francisco. According to the CBRE real-estate firm, the average apartment rent in 2013 was $2,019 in Oakland compared to a lofty $4,518 in San Francisco. Concurrently, the average commercial office space in San Francisco’s SoMa district costs $57 per square foot, which is $31 more than that of Oakland's Jack London Square.
As a result, Oakland has slowly adopted a small number of pioneering startups. This phenomenon—currently dubbed the tech “spillover”—helped Oakland draw $242 million in US venture capital investment last year. That equates to a No. 11 ranking in the nation on the list of best cities for tech startups.
This year, the city of Oakland hopes to drive more investment opportunities into its community, and two of its biggest companies are paving the way. In May, Pandora CEO Joe Kennedy announced that his company added 30,000 square feet to it to its downtown Oakland office. Meanwhile, the San Francisco Business Times reported that the real-estate investment firm Divco West plans to buy a 27-story foot office tower in Lake Merritt Plaza.
It’s good to see some success stories paying off in Oakland, especially since it can attract real entrepreneurial investment dollars. This month, Google announced that it gave an Oakland-based organization called Hack the Hood $500,000 to educate youth in the neighborhood about how to develop websites for local businesses and non-profits.
These examples make one thing clear, Oakland is in turnaround—but how far along remains to be seen. The city is still a melting pot of culture, technology, and wealth inequality. Any misstep from a tech boom could further polarize a community that’s been entrenched in crime. We’ve seen it before in San Francisco—demonstrators picketing in front of Google buses, people flipping over Smart cars, and protests against unfair evictions have all personified the tensions being stirred by abundant tech wealth. Oakland might very well be more prone to these problems. During the height of the Occupy movement, protests ended in violent clashes with police.
It’s obvious that substantial hurdles remain for Oakland. Crime problems still ravage the city. A lack of funding and investment firms hurts its economic growth. And a nagging stigma can drown a community in turnaround. But the city's evolving tech industry and culture have given reason to believe in a brighter future. Oakland still provides a viable alternative for Bay Area companies, especially if they wish to pursue economic responsibility and urban entrepreneurship. All they need is a little push.