Will the Oakland Raiders Departure Affect Local Real Estate?
It’s only April but all eyes have been on the NFL lately. There was another major shakeup in the league last week as the NFL gave its approval for the Oakland Raiders to move to Las Vegas. The move had been rumored for years, and comes on the heels of the St. Louis Rams and San Diego Chargers announcing their relocation to a shared stadium in Los Angeles.
Raider Nation is heartbroken. I am personally sad because Head Coach Jack Del Rio coached at the New Orleans Saints when I was there in the late 90s. Jack is a great coach, but more importantly, a great person. Not having him in the Bay Area is going to be a big loss.
The team has already left its home city once before. Fans believed the Raiders’ return to Oakland in 1995 meant the team was there for good. But once again, Oakland is being abandoned.
Will Oakland real estate be abandoned next?
Given the recent news, we wanted to take a look into whether the Raiders’ departure will affect local real estate. Will real estate values plummet around the Oakland Coliseum? And what impact will the move have on the city of Alameda, where the Raiders headquarters and training facility are based?
Good news: there’s no reason for Oakland and Alameda property owners to panic. Most NFL players rent due to the transient nature of playing in the NFL so the Raiders move shouldn’t cause any widespread sell off. If anything, it should open up some rental opportunities for others.
On the whole, we expect the area’s real estate market will remain strong – and perhaps improve – once the Raiders leave.
It may sound counterintuitive. The Raiders are the fourth largest employer in Alameda, and tens of thousands of fans descend upon Oakland for the Raiders’ home games. But believe it or not, a recent analysis finds that there has been no measureable improvement in Coliseum-area housing prices since the Raiders’ return to Oakland in 1995.
We ran a quick search using Collateral Analytics and found that since 2002, homes in Oakland appreciated an average of 6.9% per year, whereas in the Coliseum zip code (94621), homes have only appreciated an average of 3.8% per year.
Another survey finds that as of last year, apartment rents near the Coliseum were 31% lower than apartment rents citywide.
It is important to remember that housing prices are a reflection of the region’s economy—and the Bay Area’s economy is one of the strongest in the nation. So on the whole, we suspect the Raiders’ move will have little impact on the local economy.
“The city of Oakland and county of Alameda, economically, won’t even notice that the Raiders have left,” says Rodney Fort, a sports management professor at the University of Michigan. “The history of teams leaving has been no noticeable blip whatsoever in the region’s economic activity.”
Holy Cross economics professor Victor Matheson notes that the Coliseum hasn’t added much to the region’s economy, anyhow. “You’ve had this stadium there for 40 years, and yet all you have is basically this gigantic walled fortress and a moat of parking lots around it. It’s got to be the worst use of real estate in the Bay Area.” Matheson suspects Oakland will be better off without the team. The city can stop giving away millions in subsidies each year, and fans will start shopping at local bars, restaurants and shops instead of only spending money inside the stadium.
Oakland Mayor Libby Schaaf is already looking towards the future. Now that the Raiders’ departure has been solidified, Schaaf is focused on how to optimize real estate near the Coliseum in a way that creates jobs for East Oakland residents.
“An entertainment complex, hotels, restaurants – they would all create entry-level jobs,” she says. “It’s a prime piece of land with a BART station, train station and easy access to the airport.”
Several tech companies (including Uber) have already opened offices in the Oakland area, a less expensive alternative to San Francisco or Silicon Valley. Redevelopment of the Coliseum creates an opportunity for others to follow suit.
Just look at what’s happened at Candlestick Park, the former home of the San Francisco 49ers. When the 49ers built a new stadium, it created a massive redevelopment opportunity at Candlestick Park. The first phase of the project, dubbed “Candlestick Point” is now underway and calls for more 2,214 housing units, more than 1 million square feet of commercial space, and 9 acres of parks and open space. This mixed-use development will certainly been a boon for the local economy.
None of this may be solace for the Raiders fans whose hearts are bleeding, but Oakland-area real estate investors can rest easy knowing their portfolios won’t take a blow in the wake of the team’s departure. There’s little correlation between hosting an NFL team and local real estate prices. In the case of Oakland, evidence suggests keeping the Raiders could be doing more harm than good. The Bay Area economy remains strong and will bolster the housing market more than a single football team ever could.