Lennar Oakland Project Faces Criticism For Including No Affordable Housing

Lennar Multifamily Communities, the multifamily development subsidiary of national homebuilder Lennar, has started leasing at 19th & Harrison, its new 224-unit Uptown Oakland mid-rise, the developer said last month.

Offering a range of studios through two-bedrooms, the seven-story community has an average asking rent of about $3K across unit types, LMC Vice President of Development Tyler Wood said. Rents go from about $2,400 for studios to about $4,500 for the biggest two-bedroom units, according to Apartments.com.

The Harrison Street project has no below-market-rate units. It received approval in 2016 just before the city implemented affordable housing fees for fully market-rate projects. 

The results of that fee have underwhelmed critics, many of whom would rather see the city have an inclusionary housing requirement. As of December, zero units had been built with the three-year-old fee, the San Francisco Chronicle has reported.

Tomiquia Moss, founder and chief executive of All Home, a Bay Area-based organization promoting economic mobility for homeless extremely low-income people, said this project "represents many projects that have been built in Oakland in the last five years." She worked as the chief of staff of the mayor's office from 2015 to 2017, during Oakland Mayor Libby Schaaf's first term. 

"What's challenging for people in Oakland is that the market-rate units are getting built faster than the affordable units because it's much harder to finance affordable housing, period," Moss said.

"We need a pipeline of resources and affordable housing production that is commensurate with the need, and we don't have that right now. My worry is that we've overproduced the market-rate units."

Oakland Director of Housing and Community Development Shola Olatoye said that additional housing is a positive, also stressing the city's dire need for affordable housing.

"More housing opportunities for Oakland residents is a good thing in general," Olatoye said. "Housing is the solution for homelessness, and we as a city have to continue to make sure that our resources and our policy and our focus are aligned with that goal, particularly for people at the lower end of the income scale."

Oakland's housing market has changed drastically since LMC broke ground on 19th & Harrison in September 2017. As the coronavirus pandemic slows leasing and drives some Bay Area residents out of the region, the East Bay's housing pipeline has ballooned. Marcus & Millichap has forecast 4,600 units will open in the East Bay by year's end, the market's highest level in more than two decades.

Though Wood said LMC "knew Oakland would be a competitive market when we began this project," the developer is offering concessions similar to those offered by other Oakland multifamily developers. Current concessions at 19th & Harrison include two months of free rent and amount to about a 16% or 17% discount off gross asking rent, according to Wood. 

In spite of the pandemic and economic slowdown, Oakland's residential market has appeared relatively resilient so far. Average rents for the city's one-bedroom and two-bedroom units were both up over 4% year-over-year in June, compared to being down 11.8% and 9.6% in S.F., according to Zumper. 

For what 19th & Harrison has in terms of location and interior offerings, Wood said the community's rents are cheaper thanks to an average unit size across types of 700 SF and a more limited amenity package. At 1889 Harrison St., the project has coworking space and interior features like quartz countertops, but it lacks amenities such as a pool, for instance, Wood said.

It also has a location next to Oakland's Snow Park, near the heart of the city's downtown and a couple of blocks from Lake Merritt, that LMC said has earned it interest so far. 

"We feel like between the natural amenities that come with a mature downtown like Oakland and those that come with green spaces like Lake Merritt, this project benefits from both of those, so I think that's one of the primary selling points," Wood said.

Like other Oakland projects, LMC's has direct competition in its vicinity. Mill Creek Residential has been under construction at 1940 Webster St. on nearby Modera Lake Merritt. 

LMC itself opened its 254-unit, 34-story community at 1640 Broadway to leasing last year. At 19th & Harrison, Lennar's in-house property management group is managing operations for the community, which has a makeup of about 70% studios and one-bedroom units. 

LMC declined to share the total development cost of 19th & Harrison.

Contact Dean Boerner at dean.boerner@bisnow.com.