Die Hard

Sears has made its fortune by selling everyday things to everyday people. Maybe that's why it's Oakland's only surviving department store

Call it Oaklands Teflon Triangle. For more than thirty years, the patch of mostly city-owned land just blocks from City Hall, bounded on three sides by 21st Street and San Pablo and Telegraph avenues, has been the locus of high-flown development schemes aimed at revitalizing the city’s strangely empty urban core. Yet although developers come and go, very few deals ever stick.

The latest chapter opened last year, when Oakland signed an exclusive negotiating agreement with the Cleveland-based developer Forest City Enterprises. Almost universally known as a shrewd decision-maker, an economic powerhouse that doesn’t deal unless it’s offered a sure thing, Forest City proposed building approximately 2,000 housing units as well as retail shops within the triangle. Hands were shaken. Deals were signed. The price tag would be $500 million.

Almost immediately, momentum began to flag, and by January the agreement had been allowed to expire. Once again the city was left wondering where to peg its development hopes. That’s when a consulting firm hired by the city renewed one of Oakland’s oldest and most thwarted dreams. Concentrate a little less on housing, and a little more on shopping, they said, and not just stores targeted at locals, but the kind that would bring in customers and tax dollars from the entire East Bay region. Maybe a regional retail center anchored by … a department store.

Make that another department store.

There is one major retailer that has managed to stick it out in the triangle that Oakland planners call “uptown”: Sears. Selling everything from apparel to hardware, Sears is the only department store left within Oakland’s city limits. And as unlikely as it may seem, in an area littered with parking lots, vacant storefronts, and seedy massage parlors, where the remaining wig shops and bookstores seem to be hanging on by their very teeth, solitary Sears, by all accounts, is doing just fine. Perhaps as the city gears up for another go at attracting retail to the uptown area, it’s time for it to take a look at Sears. Is this venerable retailer the last vestige of a retail shopping age long past — or is it the first green shoot of Oakland’s downtown retail renaissance?

This is the washing machine that is going to save the world,” says Gil MacKenna gleefully, gazing fondly at a silver laundromat-style frontloader that, set to store demo mode, is busy whipping green and white pom-pom balls through a pretend wash cycle. MacKenna runs the home appliance department at Sears’ downtown Oakland store, and right now his showroom is clogged with piles of boxes and clusters of cut-rate appliances shoved out into the middle of the aisles. Ever since the state’s energy crisis made everyone’s power bills spike, the store has rushed to stock and sell as many energy-efficient appliances as possible; MacKenna’s world-saving washing machine uses a third less energy than that consumed by other models. He also stocks a refrigerator that runs on the same amount of electricity used by a 75-watt lightbulb.

At the moment, MacKenna’s department is going through yet another floor layout reorganization. Each time appliance makers come out with a hybrid this or a cross-platform that — a computer that plays the DVDs people used to be able to watch only on television, for instance — MacKenna’s team has to figure out a way to reshelve the crossbred appliances next to one another. “We used to have a computer department. We used to have a TV department. Now we have the computer-and-TV department. Who knows?” he shrugs, picking his way through boxes. “One day we’ll have vacuum cleaners with Internet appliances on them.”

These are the kinds of marketing changes any savvy retailer makes, but this store has had to evolve on many levels. The downtown Sears is unusually positioned by department store standards. It exists without the shelter of a mall or shopping plaza around it, in an area frequently maligned for its lack of foot traffic or nightlife. Since most of the store’s sales come from people who work, rather than live, in downtown Oakland, the store has evolved to suit the rhythms of a business district; its peak business hours fall between 9:00 and 5:00 on weekdays, slowing to a trickle on evenings and weekends. The Oakland store even closes an hour earlier than the rest of the chain, an unthinkable proposition for a mall store.

Sears has been around since 1893, when it was founded as a mail-order business by a former railway agent, the eponymous Richard Sears. Today the company generates revenues of $40 billion a year, from 970 full department stores and over 1,000 smaller specialty stores in North America. Sears is an old brand, so its national sales strategy has had plenty of time to evolve, with intense pressure from competitors pushing it along. (Since Sears carries such a wide variety of household goods, it views just about everyone as competition, including specialty shops, e-tailers, and catalogue services.) The company’s strategy has gone through numerous shifts and image makeovers, including one that temporarily took the Oakland store out of the game altogether.

Responding to declining sales during the ’80s, the company had, by the early ’90s, begun to make dramatic changes. Dumping its trademark “big book” catalogue, Sears replaced it with fourteen separate smaller catalogues specializing in categories like tools and work uniforms that were mailed directly to targeted customers. It launched a similarly specialized Web site, selling only the most popular products online. Most noticeably, the chain engineered a massive overhaul of its merchandise. The goal was to shake the store’s image as a purveyor of the frumpy and dumpy and to make the chain competitive with the newest retail development craze — “big box” megastores like Target and Wal-Mart.

As part of a housecleaning move, in 1993 the chain closed down 110 stores it judged to be the lowest-performing and least attractive to customers; the original Oakland Sears, at the corner of Telegraph and 27th Street, was one of them. The sixty-year-old building looked run-down, and the 1989 Loma Prieta earthquake hadn’t done it any favors. “We were in a very outdated, dilapidated building,” remembers Sears district manager Ray Velkers, who was in charge of shutting the store down. “The infrastructure was just terrible, the parking lot was in terrible shape, the roof needed to be replaced as well as the air-conditioning system. We were on four floors. We would have had to put in millions of dollars just to build back the infrastructure.” Deciding that refurbishing the store was out of the question, Sears left Oakland.

In the meantime, number crunchers at the Sears headquarters in Chicago had been taking a hard look at demographic figures. What they found surprised them. “While we thought our customer was a middle-aged man with a tool belt, it was actually a woman,” says company spokesperson Paula Davis. Even when the purchase was something presumably gender-neutral, like a major appliance, it turned out that women were calling the shots.

Sears worked to make its stores more mom-friendly. The company designed new shopping carts that could also function as baby strollers, and widened the aisles so that moms could walk through without their kids bumping into people. It rolled out a new ad campaign — the “softer side of Sears” — designed to attract female shoppers by cleverly playing off of Sears’ reputation as a retailer for manly men. “I came in for a DieHard,” began one ad, showing a picture of a car battery, “… and I left with something drop-dead,” it finished, showing a woman in a black evening dress. Another one segued from a picture of a child’s pajamas to a picture of a lingerie-clad model with the caption, “I found something to help my two-year-old go to sleep … and I found something to keep my forty-year-old awake.”

By the mid-’90s, Sears was implementing another major strategic change. While most other retailers were still leaving urban areas and flocking to strip malls, then-CEO Arthur Martinez initiated a campaign to bring Sears back to the inner cities. Partially this was a classic example of zigging when your competitors zag, but it was also motivated by sales figures. Even as they were rediscovering that women shop, Sears’ data miners were concluding that while ethnic minorities comprised a big portion of the company’s loyal customers, many of them had been left behind because of store closures in inner-city neighborhoods. Reversing its ground, Sears began actively working to reattract those lost customers by reopening stores in the cities it had left behind. The reformatted stores came with bilingual signage and bilingual clerks. Stores in neighborhoods with heavy Latino, Asian, or African-American populations ordered products favored by those communities. Soon the “softer side” ad campaign was replaced by the more general slogan, “The good life at a great price, guaranteed.”

Sears returned to the Oakland downtown in 1996 determined to evolve. It moved into the former Emporium Capwell store on the corner of 19th and Broadway (the Emporium Capwell chain had gone out of business earlier that year, leaving Oakland temporarily without any department stores at all). The company sank more than $8 million into restoring the landmark department store’s original fixtures, including marble flooring, brass entryways, and antique chandeliers, and finding sneaky ways to install air-conditioning and energy-efficient lighting without disrupting the store’s architectural design. Their efforts to preserve the building’s original art deco character are an obvious point of pride for the store’s staff. “What other store has mezzanines?” exclaims store general manager Richard Fong, pointing out the 27-foot ceilings above the ground floor and the twenty outdoor display windows, touches one would be hard-pressed to find in more recently constructed stores. “We’re very, very proud of this particular facility,” he says. “It gives a little bit of history.”

If anyone needed more proof that the uptown district was starved for retail — after all, during the final sale days at Emporium Capwell, frantic customers had ripped clothes off the mannequins — Sears’ reopening nicely illustrated the point. When Martinez arrived to cut the ribbon in Oakland with a little help from the Skyline High School band and Miss Chinatown, he found customers lined up outside all four of the store’s entrances. “It was wall-to-wall people,” remembers Velkers. Oakland customers’ enthusiastic response to the new store reaffirmed the company’s belief that it was doing the right thing by returning to downtown areas. “We belong in urban retail stores,” says Velkers. “It’s a strong market we were not paying attention to.”

The new Oakland store reoriented its marketing not only to women, but businesswomen (after all, that’s who works downtown), giving women’s wear the most prominent spot in the store. It geared the clothing and shoe selection to downtown’s mostly Asian and African-American demographic. It stocked a line of women’s clothing called African Village and a line of cosmetics called Black Opal. Two of the store’s best-selling appliances are rice cookers and George Foreman grills.

Trent Coleman is the amiable manager of what Sears calls its “softlines” department, or, as he puts it, “everything that’s not a tractor, trailer, or TV.” He says that the process of learning what sells in downtown Oakland, and what doesn’t, has largely been a matter of trial and error. For example, with shoe sizing, the store found that it could sell big sizes and small sizes but very little in between. “We used to have, like, a lot of size eights in shoes and we couldn’t get rid of them,” says Coleman. “We couldn’t give them away.”

So how well is Sears doing in Oakland? The company’s employees hedge a bit when asked to name numbers (corporate policy forbids them from handing out actual sales figures), but they insist that the downtown Oakland location performs very well and has exceeded expectations since day one. “It started out as one of our smaller stores,” says Velkers, “but I can tell you that it [outperforms] the district and [outperforms] the company.” The store’s customer transaction base has increased by a double-digit percentage in each of the last two years, and its sales growth is, as Fong puts it, “consistently up and up and up.”

Nationally, the company itself had what it calls an “inconsistent” year in 2000, with revenues up a modest 3.7% over 1999 figures. Still, it’s been a rough economy for most retailers, one that recently claimed, or at least wounded, two of Sears’ closest department store competitors. Last year the Montgomery Ward chain folded, laying off 37,000 employees and closing East Bay stores in Richmond, Fremont, and San Leandro. This year the equally venerable JC Penney announced it was shutting down 47 unprofitable stores, including the one on Alameda Island.

There are benefits to being the last store standing. “When you’re coming to Sears in downtown Oakland, there’s not much else around, so once you step in through the doors, you’re here to buy something,” says Coleman. “You’re not usually here just to look around. It’s not like we have Macy’s right next to us or Nordstrom and you’re just hanging out for the day.” Bill Claggett, director of Oakland’s Community and Economic Development Agency (CEDA), chuckles a bit when asked the secret of Sears’ success. “There’s no competition,” he says. “The area is a great area; it’s got excellent access to freeways, they have quality goods, parking is readily available. Sears has a monopoly, basically.”

Nonetheless, there is no doubt that Sears would prefer to have neighbors. The mall concept, after all, is based on the idea that if you stick two or three anchor retailers together and scatter smaller shops and restaurants between them, the businesses will feed each other and drive up profits for everybody. “We would welcome any retailer that wants to come in and join us here in downtown Oakland,” says Fong. “We welcome the competition. It will give another look to this area, it would help bring about more shoppers, more footsteps.”

His department heads agree — even though their chances of making a sale are good once a customer steps through the door, it’s still a struggle to get customers to come to downtown Oakland in the first place. “It’s the same as Auto Row,” says Coleman by way of comparison. “They have the automobile places that are all lined up — they’re not always right next to each other, but those same auto companies feed off of each other also.”

Meanwhile, like so many other East Bay retailers, Sears management worries that it’s losing business to the more recent Emeryville retail developments, which have taken head-to-head competition to such an extreme that even direct competitors like the Good Guys and Circuit City are located across the street from one another. “It hurts us a little because we’re close enough to compete with them for customers but not necessarily close enough that if someone’s going there as a retail destination, that they’re also going to think to drive to downtown Oakland,” says MacKenna. “The mob of people who go to Ikea every weekend, how many of them know that they can buy the same product for the same price over in our furniture department?”

Earlier this year, downtown Oakland did get two new clothing retailers when a Men’s Wearhouse and the Gap opened in the City Center area. But three retailers — even three successful retailers — ten blocks apart from one another do not make for a lively shopping district. “I think we’re in the right place; it’s just that the Gap and Sears isn’t a whole lot of retail,” says Fong. “There’s a lot of space between the Gap and the Sears store that needs to be filled in.”

For its part, the city would very much like to give Sears some neighbors, preferably rich ones. When talking about the uptown district, many developers and city planners adopt a somewhat conflicted attitude toward Sears. On the one hand, they’re grateful that it’s there; on the other, they’re disappointed that it isn’t something a little swankier. Sears generates a hefty chunk of the city’s sales tax revenues, but it makes them by selling car batteries, socket wrenches, and rice cookers. The city is very conscious that the uptown district around Sears, while commercially moribund, is arguably some of the best real estate in the city, located adjacent to a freeway off-ramp and three BART lines. Indeed, because of its centrality, some developers argue that the uptown is the most logical place for the city to site truly ambitious retail projects, the sort of development that could bring affluent shoppers down from the Berkeley and Oakland hills and get them to spend money in Oakland, instead of merely shooting through on their way to Union Square.

But the task of bringing in another major retailer — like Nordstrom or Macy’s — to the uptown has been a long and arduous process. When, in July, the city extended its negotiating agreement with Forest City, it was the fourth such agreement to be struck in the last twenty years. “It’s been virtually impossible to do,” sighs Claggett of the city’s numerous uptown deals. “The developers would say, ‘Oh yeah, we’ll bring the retail in.’ Then they’d do due diligence and find they just couldn’t make it work. Part of the reason is that uptown is just too far away from the downtown area and City Center. People felt it was just too far to make a retail statement.” Particularly in the ’80s and early ’90s, another part of the problem was Oakland’s rough-and-tough reputation, which, combined with high crime rates and the vacant appearance of the downtown after the earthquake, scared off any number of potential developers.

Though the area had been largely vacant since the ’60s, Oakland’s drive to revitalize the uptown began in earnest during the early ’80s, when the Maryland-based Rouse Company came up with a plan to build four department stores along the Telegraph Avenue artery near 19th Street. The Rouse proposal included both a Nordstrom and a Macy’s, but the stores were so cautious that they refused to move in unless the city agreed to guarantee their profits for five years. In addition, Rouse requested a city subsidy initially estimated at $100 million that was steadily revised upwards. Eventually the city balked at the expense, and after a Rouse vice president who had been shepherding the project died in helicopter crash, the deal fell apart.

Still, by the mid-’90s, the area adjacent to the uptown area began to show signs of renewal, reviving interest in making the zone a retail destination. The new Federal Building opened in 1993, and two years later construction began on a new state office building. Both developments promised to provide a steady population of government employees who would want to shop and eat lunch downtown. In 1996, San Francisco-based developers Burham Pacific and McFarlane Urban Retail Co. — who together dubbed themselves the Uptown Partners — proposed turning the area into an entertainment complex. This suited the tastes of then-mayor Elihu Harris, whose administration had sought to improve Oakland’s retail base by boosting its nightlife, an effort that included a $5.1 million joint venture with the Port of Oakland to move Yoshi’s restaurant and jazz club to Jack London Square. The Uptown Partners proposal included renovating the dilapidated Fox Theater, building a 5,000-seat multiplex cinema to be operated by the Magic Johnson Theatres chain, and constructing a 120,000-square-foot retail center and a parking garage. The developers estimated that the project would cost $83 million, with $35 million of that to be paid by the city. Once again, the final price tag was just too hefty, and the city turned the project down.

In May 1998, the city was ready to try another theater-centered project. Chuck May, the head of real estate for Sears, had put the city in touch with a Chicago-based firm, Urban City Development, which drew up plans for an uptown complex that included 200,000 square feet of retail, a 14-screen movie theater, a 1,500-car garage, and a grocery market. But while one group of city staff was courting Urban City Development, a separate group had been making overtures to an entirely different design and development team. Two years earlier, Zennie Abraham, at that time the economic advisor to Harris, had read an article in Fortune about the work Forest City Development and Robert A.M. Stern Architects had done restoring New York City’s Times Square, in which the once-dilapidated New Amsterdam Theatre was turned into the project’s centerpiece. Now Abraham hoped to reassemble the team to take on the Fox and its surrounding uptown neighborhood.

Abraham’s idea was that the city would pay Stern to design a master plan for the entire uptown area — everything, including signage, open space, and public art. The architect would be in charge of finding a developer to construct its vision, most likely Forest City. As the icing on the cake, Abraham hoped to pull Disney into the deal. Abraham made an all-out effort to sell his idea to these three companies. “I made a pitch that said, ‘You’ve got an area here that sits beside three BART lines, it’s undeveloped, it’s clean by East Coast standards — it’s not bombed-out buildings, you just don’t have that here. There are 500,000 person trips through the area per day, so you get a lot of looks,'” says Abraham. “I wanted to make it tasty for them; I used phrases like, ‘You can build the Times Square of the West Coast here.'”

Despite Abraham’s efforts, New York City has cachet that Oakland does not, and Disney never bit. Stern and Forest City, however, did show interest in the project. Abraham, as well as Harris, City Manager Robert Bobb, then-District 2 councilmember John Russo, and District 7 councilmember Larry Reid, made a presentation to Forest City at the International Council of Shopping Centers convention in Las Vegas, an annual do where developers and city planners hobnob and pitch ideas at one another. Forest City subsequently dispatched staffers to scope out the project in more depth. There was only one big problem — architect Stern wanted to be paid $500,000 just for doing the preliminary drawings and model.

Before Stern’s lofty price tag could even become much of a talking point, however, a larger issue developed. Abraham learned that the City Council was on the verge of handing an exclusive negotiating agreement to Urban City Development. A tense standoff ensued, with different factions within the city government pushing for the two different developers. Although Oakland awarded a sixty-day agreement to Urban City, the decision seems to have been star-crossed, and the deal fell through soon thereafter. Meanwhile, the plans to work with Stern had been abandoned, and just about everyone assumed that after its negative experience with Oakland, Forest City would never be heard from again. After more than a decade’s worth of meetings and negotiations, the city still had no plans, no drawings, and no developer on the line. It was back to square one.

Why can’t Oakland get an uptown deal to stick? It depends on who you ask. Former mayoral advisor Abraham says that what the city really needs, but has failed to do, is come up with definitive goals for what it wants the uptown area to look like. “The city never really sat down and said, ‘Okay, here is our overall plan, let’s put a dollar figure on it. Here’s what we want to achieve and where, and here’s what it’s going to look like,'” says Abraham. “[That way] you’re not flying around trying to do deals on different parcels. You have signage designs, sidewalk plans, floor ratios, public art — all the elements that really comprise a good downtown plan.” Instead, he says, the city has chased one pie-in-the-sky plan after another, believing that each new developer will be the one guy who can turn it all around. “We’ve been so deal-oriented, we’ve lost sight of the big picture and the need for a coherent team,” he says. “That’s not the problem of any one administration, that’s across the board.”

It’s certainly true that one of Oakland’s historic development problems has been a failure to get the various factions involved in city planning to agree on even such basics as where the commercial center of the city should be located. Instead of building from a single strong point outwards, the city has allowed different patches of real estate to develop independently of one another, so that even its most successful downtown retail districts — Jack London Square, Chinatown, the Grand Lake area — are disconnected from one another, separated by freeway overpasses, streets that don’t go all the way through, and stretches of empty lots and vacant buildings. Some point out that development of the uptown area may have been set back by the fact that the city keeps trying to build from the relatively blighted area near the freeway toward the more pleasant, well-developed neighborhoods by the lake, instead of the other way around.

On the other hand, those wary of the idea of a master plan point out that the city has had a tendency to drive developers nuts by micromanaging every development proposal that does come along. “Uptown has been sitting vacant for thirty years because the city’s leaders have believed that every detail should be subject to political consensus — where the newspaper kiosk goes, how many square feet it should be, what materials should be used, what kind of newspapers should be sold,” says Russo, who is now Oakland’s City Attorney but who saw his share of development plans come and go when he represented Chinatown on the City Council. Russo believes that instead of dictating content, the city’s zoning power is a more effective tool for resolving land-use questions, and for getting developers to stick around. “What should be agreed upon by policymakers are issues like, ‘We’re not going to do anything unless 25 to 30 percent of the housing units are truly affordable,’ or ‘We require that significant open public space be an essential part of your plan.’ You can lay down markers of what you want to achieve, but not exactly how and on what street corner you are going to achieve it,” he says. “I’m not saying turn it over to the private sector and let them go wild, or let the profit incentive alone motivate everything. I’m saying the city can’t be a developer.”

Perhaps the most persistent obstacle to uptown development, however, is the simple fact that bringing a developer into an already built-up area — particularly one that has been commercially dormant for decades — is no easy trick. Proponents wax eloquent about “urban infill,” arguing that it reduces suburban sprawl, provides a chance to rehabilitate blighted and contaminated sites, and eliminates freeway traffic by providing retail destinations to which shoppers can walk or take public transit. But those benefits assume success and convincing private developers and retailers to take the risk is another matter. The fact is that the kinds of sites that are available in inner cities don’t always match up with what modern retailers want. Inner city sites are often small and hemmed in by other pre-existing developments; some of them need extensive environmental caretaking or seismic retrofitting before the developer can go about building anything. While Oakland has a plenty of historic buildings (and preservationists eager to defend them), modern retailers want just the opposite — big spaces with high ceilings and without interior columns. They want to build fast, using a strict design formula and in an area where they’ll encounter few zoning and construction hassles. In general, that means the suburbs.

Sears’ three-year hiatus from Oakland coincided with a general retail exodus from the inner cities in the late ’80s and early ’90s. “Real estate development was in the doldrums,” recalls Kofi Bonner, who was Oakland’s city manager and then its director of economic development in the mid-’90s. “The mantra for most developers at that time was ‘Stay alive till ’95.’ It was so difficult to find financing and retailers — it was just a tough time for inner-city developers. Retailers who were doing well were the Targets of the world, the Gaps. They weren’t looking for city centers; they were quite happy being in the suburbs, in the strip malls, the Home Depot-based centers.”

Ten years later, suburban mall construction has dwindled, but that doesn’t mean developers are rushing to follow Sears back to the inner city. The suburbs still rule, and the proliferation of big boxes near freeway exits doesn’t seem to have slowed — witness the huge success of Emeryville’s Ikea. In a market skewed toward huge demands for space, it’s hard for an already-developed city like Oakland to keep up. “The problem is, you have to have a lot of land in order to have a major two-or-three anchor development, more than we have available anywhere in the downtown,” says Claggett. “Problem number two is the department stores themselves are not doing well now. Nordstrom just pulled out of urban developments in Cincinnati and Pittsburgh. There are changes underway in how the retail industry has organized itself to address different kinds of markets and none of them augur well for major regional-serving retail in downtown Oakland.” Any department store that would consider Oakland at this point would likely ask for a hefty subsidy, he says, and history shows that the city has repeatedly balked when asked to subsidize stores. It’s one of those “money attracts money” propositions, and so far Oakland has refused to supply the bait, or, conversely, to prove that an upscale department store can survive in Oakland without subsidization. “They won’t go anywhere until someone else is already there,” sighs Russo of the big-name department stores. “People in the retail field are not pioneers; they’re a herd.”

And so for now, uptown’s fate is largely in the hands of Forest City Developers, who despite their previous experiences with city negotiations, did in fact return to Oakland. In early 2000, the developers made a proposal to build about 2,000 housing units plus about 70,000 square feet of retail between Telegraph and San Pablo and 17th and 21st streets. The housing would be composed primarily of four-story apartment buildings built over a garage, although the plan allowed for fifteen- to twenty-story condos being phased in later by a subdeveloper.

When that proposal stalled, the discussion shifted again, particularly when a draft of a city-commissioned study of uptown retail began circulating through city development offices. Soon staffers were beginning to envision a more ambitious retail component for the project, one with at least 150,000 or 200,000 square feet of retail space. In June, in a memo addressed to City Manager Robert Bobb, CEDA analysts wrote that “[Forest City’s proposed] project should be … revised to increase the retail component, and focus on either a department store-anchored traditional retail center or a destination regional-serving specialty retail center.” Hillmer went on to complain that the original designs “did not take full advantage of the retail development potential that exists in the Uptown Project Area, when viewed in light of the area’s historical role as a regional retail center and Oakland’s desire to capture a share of the current retail growth in the East Bay.”

The city’s urge to be involved in the effort to attract retail to the uptown has always been a Pandora’s box; now that it has been reopened, the questions that emerge are more complicated than just whether or not the city needs another department store. First of all, anti-gentrification and tenants’ rights activists warn that Oakland has a responsibility to protect its own, and they will fight hard to ensure that the new development — indeed any development — doesn’t result in mass evictions. Forest City’s recent promise to allocate twenty percent of its units to affordable housing is, no doubt, a reaction to these efforts. (A particularly egregious warning shot was fired earlier this June when tenants of the Westerner Hotel, a single-room-occupancy hotel on San Pablo Avenue, were sent letters telling them they would have to relocate to make way for the new project.) District 3 councilmember Nancy Nadel, a frequent ally of tenants’ rights advocates, also points out that the city must make sure it doesn’t wipe out the neighborhood’s existing stores to make way for new retail. “We need to have some focus on smaller retail businesses, making sure we actually support them and not push them out,” says Nadel. “Whether it’s a small music company or a key repair place or other things that have been downtown in the city, we should incorporate them into whatever the strategy is so we’re not kicking out whatever has been there for the long haul.”

And then there are the private investors and developers who have been keeping an eye on the city’s doings for years. Take, for example, Merritt Sher, founder of Terranomics Development, which did the leasing and marketing for Jack London Square, converted Oakland’s Ironworks Technology District, and serves as an advisor to the Shorenstein Company, which operates City Center Plaza. Sher believes that since retail development seems to be moving away from malls, it may finally be moving in a direction that Oakland can follow. “The public is basically tired of the big retail shopping centers,” he says. “They like big boxes, but the creative East Bay customer, the eclectic shopper, doesn’t really go to the mall unless it is an absolute necessity.” The newest successful retailing formula is setting up outdoor plazas like Berkeley’s Fourth Street and Oakland’s Jack London Square, where developers offer a mix of chain stores and independent shops. A similar development model is being applied in the Old Oakland neighborhood and could, Sher believes, be replicated in Oakland’s uptown. It’s an idea that just might resolve the city’s conflict between its desire for retail and its lack of space.

On the other hand, listen to realtor John Loh. Loh is the former president of the Oakland port commission and the founder of Loh Realty and Investments, which has had a hand in several of downtown’s big developments, including the American Presidents Line Building, Pacific Renaissance Plaza, the Cadillac Fairview Building, and much of the recent development at Jack London Square. (“A significant portion of the buildings you see under construction near the port were either purchased from me, through me, or from the person to whom I sold the property,” he says.) While Sher pushes for developments that are small-scale and creative, Loh worries that the uptown project’s main failing is that it isn’t ambitious enough, particularly if the city wants to bring the big spenders down from the hills. “You can’t be a vibrant and effective destination point with only 100,000 square feet of retail,” he says. “You need anchor tenants as a draw, such as Macy’s, Nordstrom, or Neiman Marcus. If you have the anchors, the people will come.” He thinks the city should invest in a higher-density, higher-profile project, and cautions against adopting a too-modest plan for such a prime parcel of real estate, especially now that the Bay Area’s economy seems to have entered a slump. “Once you develop on a piece of land, it’s gone,” says Loh.

Then there are those who are simply tired of waiting. Even councilmember Nadel, long known as the sticky cog in most downtown development plans, calls Forest City “a bird in the hand,” and acknowledges that the uptown area is the right place for a major development. “A lot of the schemes that people talk about wanting to see are not going to happen, and that’s the way it’s always been,” says Claggett. “That’s what Oakland did for many, many years — they kept waiting for the turnaround and it never came.”

So is the lonely but busy downtown Sears store the alpha or the omega — the first of the new uptown retailers, or the last of the city’s traditional department stores? If you ask Ray Velkers, Sears is firmly the former. “We decided to go into Oakland based on faith that this market is going to grow,” says Velkers. “We knew initially that the people in Oakland don’t really shop in Oakland — their number-one shopping destination is Walnut Creek and number-two is downtown San Francisco — but we also knew that in a ten-mile radius there are something like 500,000 people. So when we made the decision to go into Oakland, we figured we would be in the forefront of other retailers. If we went in, others would follow and we would perhaps start a retail core.”

At the moment, Sears is the uptown’s retail core. The store has done well during its five years in the downtown, but its success, paradoxically, may not be one the city will try to replicate. It is more enticing to dream about building high-rises, cinema complexes, bohemian shopping plazas, and posh housing for 10,000 new residents than it is to consider copying the strategies of a chain retailer that has managed to survive in a hostile economic climate by selling the utilitarian and the unglamorous, and by moving into the neighborhoods where its competitors would not. After all, Sears remains an essentially working-class store in a city that no longer wants to be known as working-class. “They’re a serviceable store for the people who are there,” says Sher diplomatically. “But as the shopping district moves further to the west from Broadway, some of these that were the most successful areas on Broadway thirty years ago are going to be some of the last to revitalize. You need to take those areas that have less of a traditional characteristic and make them funky and cool and exciting and all that stuff.” And by “all that stuff,” Sher also means “classy.” “You want something that appeals to an upscale shopper,” he says. “You can appeal to a person with less buying power all day, and you’ll never get the volume you need to run a center. But if you get the person with more buying power, then you’ll be providing an opportunity for everyone. That’s how this whole things works.”

As for the people who work at Sears, they don’t really care whether their new neighbors set up shop in a mall or a series of small stand-alone stores, whether they make their money by selling tool kits or lattes or Fabergé eggs. They just hope that within a few years, they will no longer be the only living thing in the uptown triangle. “I’m very bullish on the future of Oakland,” says Velkers. “When I go down there and see all the cranes and all those new buildings springing up, and I know what the cost of real estate is in San Francisco versus Oakland, I think Jerry Brown is right. We’re going to look back in ten years and say, ‘Wow, is this ever exciting,” he says. “It’s got to be the next frontier.”

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