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Introduction

IN 2016, THE OAKLAND CHAMBER OF COMMERCE CHARGED BEACON ECONOMICS WITH

developing a report about economic conditions within Downtown Oakland. For the purposes

of this report, Downtown Oakland is composed of three Business Improvement Districts –

Downtown, Lake Merritt/Uptown, and Jack London. The analysis of the Downtown Oakland

region begins with a focus on broader employment trends, and then examines a handful of

business clusters concentrated in the Downtown area.

To facilitate a deeper investigation into the employ-ment trends and demographics of the Downtown re-gion, Beacon Economics constructed a broadergeographical boundary, hereaer referred to asGreater Downtown Oakland, comprised of ten censustracts including and surrounding the more refinedDowntown area. From here, the analysis delves intorecent industry and subsector employment trends,

2016 Downtown Oakland Report

and provides a snapshot of the region’s demographicmakeup. At this stage, it is important to note that someof the figures contained in this report may not line upwith figures produced by other private sources for theCity of Oakland. These discrepancies, if present, typ-ically reflect any number of differences in how theestimates were derived. The employment figurescontained in this report reflect payroll employmentfor privately-owned establishments located in Down-town and Greater Downtown Oakland. Accordingly,these figures omit the roughly 17,000 public workersemployed in various sectors throughout GreaterDowntown Oakland. Furthermore, the underlyingdata from which these figures were derived do not in-clude self-employed workers. This methodology iscorroborated by other publically available datasources, whose figures roughly align with thosecontained in this report. The U.S. Census Bureau’sLongitudinal Employer-Household Dynamics data,for instance, reports roughly 50,000 private jobs forGreater Downtown Oakland. While these differencesmay yield seemingly conflicting levels of employ-ment, they have done little to obfuscate the positivetrends taking place in the heart of Oakland.

June, 2016

Summary

DOWNTOWN OAKLAND IS QUICKLY BECOMING A MAJOR HUB OF ECONOMIC ACTIVITYin the East Bay region and especially in the City of Oakland. The Downtown area has set

the tone for a broad-based recovery from the Great Recession, and more recently has been aforce behind the uptick in economic activity observed throughout the City of Oakland overthe last several quarters. This increased activity has helped cultivate a diverse array of rapidlygrowing industries, providing a plethora of new jobs across a wide spectrum of education andskill levels.

The Downtown region is defined by a strong employmentbase rooted in several high-wage industries. The Profes-sional, Scientific, Technical, and Management industry topsthe list, accounting for more than one-quarter of employ-ment in Greater Downtown Oakland. In fact, this industry isnearly twice as concentrated in the Greater Downtown re-gion relative to the City of Oakland overall. Not only has thisindustry provided a significant source of new jobs for Oak-land residents, the predominately college-educated profes-sionals employed in the industry earn top-tier wages. Thegrowing concentration of these high-wage jobs has set thestage for growth in other sectors of the local economy. The Health Care and Social Services industry also playsa vital role in the Downtown Oakland economy. Establish-ments engaged in this industry continue to expand theirpresence in the Greater Downtown region, sustaining asurge in employment that can be traced back to the earlystages of the Affordable Care Act’s implementation. Thewages paid to workers employed in this industry, while notas eye-popping as the wages paid to workers in the region’soffice-based industries, hint at the dichotomous nature ofthe Health Care industry overall. The industry is an impor-tant source of jobs in any region, as the types of jobs offeredare catered to individuals across a broad range of skill setsand work experience. The Health Care industry includes wellpaying and higher skilled jobs for those employed in Hospi-tals and Ambulatory Health Care Services, juxtaposedagainst low-wage, and oen part-time, positions offered byestablishments engaged in Social Assistance. Clearly, thisindustry has contributed greatly to providing a thick supplyof jobs across a wide spectrum of skill levels. The continued growth of consumer spending citywidehas also fueled employment and wage gains in GreaterDowntown Oakland. The daytime population in the GreaterDowntown region – which combines payroll employees, un-employed residents, and self-employed residents – is nearly

double its residential population, while a growing cluster ofbars, restaurants, and cultural events has made DowntownOakland a prime evening hotspot for Bay Area residents. TheDowntown area Business Improvement Districts may alsobe contributing to the strong gains observed over the pastyear. These organizations have proven essential in creatingan inviting environment for residents and workers alike.They have made it their task to revitalize the City’s urbancore, developing strategies and forging partnerships to con-tinue making Downtown Oakland an attractive destination. Increased spending in the region, brought on byDowntown’s growing popularity, has resulted in rapidlygrowing wages among workers employed in consumer-spending driven industries such as Leisure and Hospitalityand Retail Trade. Moreover, workers employed in these in-dustries in Greater Downtown Oakland earn a tremendouspremium relative to their counterparts elsewhere in the Cityof Oakland. Given that many of these jobs require lower lev-els of educational attainment, it is clear that the positiveeconomic trends observed in Downtown Oakland in recentyears have been spreading throughout the local economy. Until recently, the sustained economic growth ob-served over the past few years, has been slow to stimulateincreased construction activity in the Greater Downtown re-gion. Then, in 2015, a number of pent up projects finallycame to fruition. Over the past year, several new structureshave received the go ahead for construction, while renova-tions of existing non-residential structures have skyrock-eted. A huge volume of new residential units has also beenpermitted for construction in the region, which should makeDowntown Oakland an even more enticing residential loca-tion. Indeed, these modern infrastructure investments andbuilding improvements will prove to be essential in contin-uing Downtown Oakland’s transformation into a vibrantcommunity for local residents and business owners alike.

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Employment in Downtown Oakland

• The employment environment inDowntown Oakland has rebounded signifi-cantly since the depths of the Great Reces-sion. Private employment in the area grew tojust over 34,000 during the second quarter of2015, up 23.0% from the second quarter of2009, when the U.S. recession officiallyended. • Private employment growth inDowntown Oakland continues to gainmomentum. Growth started to pick signifi-cantly up during the latter half of 2014 andthat carried over into 2015, as private employ-ment increased 5.6% from the second quarterof 2014 to the second quarter of 2015. • The wages paid to workers employedin Downtown Oakland have increased almostcontinuously since the first quarter of 2009.The average wage paid to these workersincreased 1.2% to $93,800 from the secondquarter of 2014 to the second quarter of 2015. • The average worker employed inDowntown Oakland earns a 50.1% premiumrelative to the average worker in the Cityoverall.

• Underpinning the strong wage gainsobserved in Downtown Oakland is the rapidlygrowing Technology sector. Just over 3,000workers are employed in this sector inDowntown Oakland, with an average annualwage of $127,000. • Consumer spending in DowntownOakland has clearly picked up in recentquarters, as evidenced by the rapidly growingcluster of bars and restaurants located inthe area. To this end, employment in theroughly 100 bars and restaurants located inDowntown Oakland has increased nearly8.0% from the second quarter of 2014 to thesecond quarter of 2015, dwarfing the rateof payroll expansion observed at bars andrestaurants elsewhere in the City (1.0%).

Total Private EmploymentDowntown Oakland, Q1-08, Q2-15

Total Private WagesDowntown Oakland, Q1-08, Q2-15

Business Clusters in Downtown Oakland, Q2-15

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Employment Trends

• Employment in the broader Greater Downtownregion also gained momentum during the first half of2015. Employment in Greater Downtown Oakland in-creased 4.2% to 55,700 jobs from the second quarter of2014 to the second quarter of 2014. • The wages paid to workers employed in theGreater Downtown region have grown strongly in recentquarters, though gains have not been as robust as in themore refined Downtown area. The average workeremployed in Greater Downtown Oakland earned justunder $82,000 in the second quarter of 2015, or roughly32% more than the average worker citywide. • The Professional, Scientific, Technical, andManagement industry and the Health Care industryform the foundation of employment in GreaterDowntown Oakland, combining to account for just overhalf of all jobs located in the region. • The Greater Downtown region also has a strongpresence in consumer spending-driven industries. Therewere roughly 5,800 workers employed in the Leisure andHospitality industry in Greater Downtown Oakland,with another 2,500 workers employed in the region’sRetail Trade industry. • Over the past year, establishments located inthe Greater Downtown region that are engaged in Man-ufacturing have expanded payrolls while Manufacturingestablishments elsewhere in the City of Oakland havecut back. Moreover, the average Manufacturing em-ployee in Greater Downtown Oakland earns nearly twiceas much as the industry average across the City. This isdue to a mix of manufacturing activity in the region.Greater Downtown Oakland hosts manufacturerswho are more reliant on domestic products and haveexpanded payrolls to match growing domestic demand.Elsewhere in the City, manufacturers with more interna-tional exposure have seen payrolls fall due to slowingglobal economic activity. • Establishments located in Greater DowntownOakland pay a substantial premium to their workersrelative to the City overall across every industry. Thispremium reflects differing levels of work experience,education, and technical skills, among other things.

A Deep Dive into Greater Downtown Oakland

Total Private WagesGreater Downtown Oakland, Q1-08, Q2-15

Total Private EmploymentGreater Downtown Oakland, Q1-08, Q2-15

Total Private Employment in GreaterDowntown Oakland, by Industry, Q2-15

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• The Health Care industry in Greater DowntownOakland provides a large number of jobs spread across thewage spectrum. The high-wage jobs in this industry are pre-dominately concentrated in Hospitals ($97,500) and relatedsupport services such as Ambulatory Health Care ($82,100). • Despite its already large share of employment inGreater Downtown Oakland, the Professional and TechnicalServices subsector has continued its robust growth. Em-ployment in this subsector increased 8.3% to 9,300 from thesecond quarter of 2014 to the second quarter of 2015. • The Management of Companies and Enterprisessubsector is the second component of the Professional,Scientific, Technical, and Management industry located inGreater Downtown Oakland. This subsector employs nearly6,700 workers who earn, on average, $140,000.

Demographic Snapshot

• Although Greater Downtown Oakland is home to7% of the City’s population, it attracts nearly 30% ofOakland’s entire daytime population. During the day, thenumber of people in Greater Downtown Oakland nearlydoubles the region’s residential population. • Levels of educational attainment among GreaterDowntown Oakland residents are on par with the Cityof Oakland overall. However, there is a slightly higherconcentration of residents with college degrees inGreater Downtown Oakland than in the City. • Greater Downtown Oakland has experiencedsubstantial residential construction since the turn of themillennium. Approximately 21% of housing structuresin the Greater Downtown region have been constructedsince 2000, compared to a mere 7.1% in the City overall.Clearly, great strides have been made in turningDowntown Oakland into a desirable place to live andwork.

Total Private Wages in GreaterDowntown Oakland, by industry, Q2-15

Private Employment in GreaterDowntown Oakland, for Major Subsectors, Q2-15

Greater Downtown OaklandDemographics, 2010-14

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Residential Construction

• Total construction activity in GreaterDowntown Oakland, as measured by permitvalues, was resurgent in 2015 aer a numberof relatively slow years. Major increases innon-residential construction activity accountfor much of the gain, though residentialconstruction in the region has been broughtback to life over the past year. • Non-residential Alterations/Additionsaccount for a large chunk of the increasein construction activity observed over thepast year, primarily due to the major re-development permitted for Uptown Station(1955 Broadway). • A growing number of mixed-useconstruction projects are currently underwayin the Greater Downtown region, bringingwith them a large number of new residentialhousing units. In fact, more than 2 times asmany residential units were permitted forconstruction in the region in 2015 (515) thanwere permitted in the 9-year period from2006 through 2014 (239). • The surge in residential activity ispartially the result of good public policy.Following the City’s passage of the 2014Specific Plan, the Broadway-Valdez districthas become a major development hotspot asdevelopers rush to get faster entitlements.The rapid success of this policy in bringingthe attention of developers back to the heartof Oakland should be a signal to policy-makers that regulatory hurdles still in placeelsewhere in the City are exacerbating analready tight supply of housing.

1Roland Li, “Carlyle Group-backed Oakland housingproject to break ground,” \textit{San Francisco BusinessTimes}, March 22, 2016.

Non-Residential Building PermitsGreater Downtown Oakland, 2006 to 2015

Residential Building PermitsGreater Downtown Oakland, 2006 to 2015

Residential Units Permitted for ConstructionGreater Downtown Oakland, 2006 to 2015

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THE OAKLAND CHAMBER OF COMMERCE, IN PARTNER-

SHIP WITH THE DOWNTOWN OAKLAND ASSOCIATION

commissioned Beacon Economics to track the trends and

characteristics of Oakland’s growing downtown business

districts. Understanding Oakland's discreet ecosystems is

essential in advocating for policies that create opportunities

for our residents, encourage equitable job growth and focus

on Oakland’s diverse and growing industries. Thank you to the

Downtown Oakland Association for its partnership and com-

mitment to foster an environment where businesses thrive

and residents and visitors alike can enjoy our great city.

Sincerely,

Barbara LesliePresident and CEOOakland Chamber of Commerce

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Oakland Chamber of Commerce • 475 14th Street • Oakland, CA 94612(510) 874-4800 • www.oaklandchamber.com