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Oakland, the Next Big Thing in Tech?

Oakland Jack London Square

Image courtesy of Scottsjls.com

Is Oakland an attractive spot for new technology? Yes, I'm talking about this Oakland. Well, to many it might seem like a bad idea, mostly due to the fact that the city reports one of the highest crime rates year-after-year, stigmatizing the city as one of the more unsafe cities in the state. But new evidence suggests that Oakland is in turnaround. And we've plotted out the four best reasons why.

The Talent Spillover - 

Oakland's biggest and possibly best indicator as one of the top destinations for tech is simply due to its location. People with backgrounds in technology flock to San Francisco and Silicon Valley for the best in job opportunities, creating a deep applicant pool for Oakland to poach from. Meanwhile, the talent created by UC Berkeley gives Oakland a major leg up. Each year, thousands of new, well-qualified job seekers turn to local companies in Oakland for an opportunity. 

Consequently, the city has drawn $242 million in US venture capital investment last year alone. That equates to a No. 11 ranking in the nation on the list of best cities for tech startups, which puts it right behind highly-touted Austin, Texas.

Inexpensive - 

Oakland's average commercial real-estate and apartment rents are a far cry from those in San Francisco. According to the CBRE real-estate firm, 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. Concurrently, the average apartment rent in 2013 was $2,019 in Oakland compared to a lofty $4,518 in San Francisco. 

These high San Francisco rents have forced dozens of San Francisco-born companies out of the city and into Oakland offices. And for some, it's paid off. In 2009, Pandora ditched the high San Francisco rents in order to survive the country's economic downturn. Since then, the streaming music giant has flourished in the past four years, becoming one of the biggest publicly traded companies in Oakland. 

Other big-name companies are taking note of Pandora's success. In fact, Evernote and Box have been the most recent companies linked to an Oakland move

Room to Grow - 

Unlike dense San Francisco, Oakland virtually has no physical limitiations for growth. In February, the San Francisco Business Times reported that the real-estate invest firm Divco West plans to buy a 27-foot office tower in Lake Merritt Plaza. A few months later, Pandora CEO Joe Kennedy announced that his company added 30,000 square feet to its downtown Oakland office. This job growth is a welcome sign for Oakland and a precursor for more new expansion. 

Social Good Companies - 

There's something inspiring about Oakland's tech scene. It may be small, but there's dozens of companies striving towards social good. Companies like GoldieBlox, which is inspiring the next generation of female engineers; and Mindblown, which is teaching teens and young adults about personal finance. These firms set the standard for business in Oakland. And fortunately, it has helped Oakland draw 32.5% future job growth over the next ten years, about 4% below the national average. 

All these examples make one thing clear, Oakland is in turnaround—but how far along remains to be seen. The city's social problems -- crime, wealth inequality and lack of opportunity for young people -- still remind us that there are substantial hurdles to overcome. 

But Oakland still provides a viable alternative for Bay Area companies. It's vast amount of reasonable real-estate options, local talent and limitless growth opportunities make the city worth a second look for tech companies who want to cut costs and create opportunities for young job seekers. 

Be sure to follow @nicktrenchard for the latest in Bay Area tech