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Is This Oakland Developer Building Sorely Needed Housing—or Dropping Gentrification Bombs?

Danny Haber is building millennial-friendly, algorithm-enhanced developments in West Oakland. Are they signs of an impending invasion or just...houses?

 

Editor’s Note: This is one of many stories San Francisco is publishing over the next month as part of the June 2018 East Bay Issue. To read stories as they become available online, click here.


On a drizzly afternoon
in March, Danny Haber is walking down 24th Street in West Oakland, giving a tour of two of his new apartment developments, when he pauses mid-step and turns to look over his shoulder. “You see that?” he says, a bit of edge to his voice. A car slows down as it drives past us. “It looks like Jonah’s car. Sometimes he just sits out here in that Volvo.”

Jonah is Jonah Strauss, the 38-year-old founder of the Oakland Warehouse Coalition and Haber’s most vocal adversary. A former resident of the 24th Street building that Haber’s company, oWow, bought and is redeveloping into 16 apartments, Strauss has described Haber’s developments as “gentrification bombs.” “As if the subprime mortgage crisis wasn’t enough, you now have Danny Haber preying on the neighborhood,” he says. (As for whether Strauss was stalking Haber in his car, he says he wasn’t: “I have no desire to interact with him in person.”)

Developer Danny Haber on top of one of his macro-living houses in West Oakland.

The car having passed by, Haber continues his tour. “This was empty and blighted,” he says, pointing to a redbrick warehouse with a wood barrier surrounding it. On 23rd Street, construction crews are hammering away inside an adjacent 27,000-square-foot warehouse that used to be home to anarchist publisher AK Press. Dozens of apartments have been framed out with wood beams, and a large courtyard has been carved out of the building’s interior.

In a twist on the current micro-apartment trend, Haber is dubbing these spaces in West Oakland “macro” units. At around 850 square feet apiece, they’ll be substantially larger than the usual 350-square-foot-and-below micros, with ultra-efficient layouts that somehow pack in three to four bedrooms, a full kitchen, and a living room. Prices will range from roughly $3,000 to $4,000 a month for the entire unit; a bedroom will go for $1,100 if the place is split between roommates (oWow is building an algorithm that will place applicants with compatible roommates based on data scraped from Facebook).

In the Bay Area, almost all real estate developers can expect to face some opposition as they go about their complicated business. Community pushback is baked into the process. But Haber’s projects—there are currently six in the works in Oakland, mostly in former warehouse spaces—have made him more polarizing than most, because of both where he’s building them and how. Most of his macro-units are categorized as live-work spaces, which by city law allows him to move forward without the often-lengthy community-input period that would be required if they were simply residential. To his critics, Haber is exploiting a loophole in the building code for profit. Haber says he’s just innovating within the letter of the law. “Whenever you do something different or new,” he argues, “you’re going to have someone going after you.”

That’s doubly true in a place as vulnerable and reactive as West Oakland. Though it’s smack-dab in the middle of one of the most expensive and highly regulated housing markets in the country, the area still has a Wild West feel to it. Longtime residents, many of them African American, have complained for years that authorities neglect the area. An entire community of artists, many of them white, have carved out giant live-work spaces as their homes, sometimes without permission. But lately, a post–Ghost Ship fire safety crackdown has threatened that way of life, as the city has started red-tagging warehouses deemed unfit for habitation, forcing residents out. All the while, rents and housing prices have skyrocketed, which has brought significant attention from developers. “People today are moving to Oakland,” Haber says flatly. So he, too, recently relocated the one-year-old oWow (the name, he says, was partly inspired by the rumored last words of Steve Jobs) from its previous home on a pier in San Francisco to a big office space above a vegetable stand in downtown Oakland.

Haber says his macro-housing concept addresses the East Bay’s accelerating affordability crisis by serving a sector of the market that’s often overlooked: the middle class. With soaring construction and land costs, mid-price homes simply aren’t profitable to build, which is why most housing under construction today is one of two extremes: luxury homes for the wealthy or government-subsidized housing for the poor. Haber wants oWow to create housing for the so-called missing middle, especially the value-hungry millennial set. The company’s website places heavy emphasis on its roommate-matching service, which critics like Strauss point to as evidence that Haber’s housing is designed for affluent newcomers who will price out existing residents. But Haber says that his macro-apartments could also be a good option for families or people already living in the neighborhood, and that rents will end up being 40 to 50 percent less per bedroom than in typical market-rate buildings.

Either way, turning warehouses that once housed starving artists into market-rate homes has not been an auspicious public relations move. Haber is either naïve or strategic enough to be the only developer willing to build this kind of housing in Oakland. His ability to take the heat could work to his distinct business advantage. But he may also be dangerously underestimating his opposition.


In October
, prompted by concerns brought up by Strauss’s Oakland Warehouse Coalition, the Oakland Planning Commission held an unusual hearing on the status of all six of Haber’s projects. In reality, it was a de facto trial on all things Danny Haber. For more than two hours, more than 50 speakers took turns at the microphone. Angry neighbors and other opponents brought up everything from his past as a landlord to accusations that he was exploiting Oakland’s black community support to make a profit. But about half the speakers defended Haber.

C.B. Smith, an artist who lives near 1919 Market—a 63,000-square-foot, partially demolished warehouse that the city red-tagged in 2016 and that Haber subsequently bought—accused the developer of paying people from the neighborhood to speak on his behalf. (Haber denies this.) Strauss took to the podium toward the end of the hearing and told a story of an elderly resident at another Haber development who’d been roughed up by a contractor and told to leave, despite still residing in the building. “I urge you to stop all Danny Haber projects now,” he said.

A Boston-born recording engineer who moved to the Bay in 2004, Strauss spent 11 years in a live-work loft, at 671 24th Street, until March 2015, when a fire broke out in the middle of the night, killing two of his neighbors and injuring several others. The city declared the building unfit for occupancy. Strauss says he and a roommate were each paying $875 per month for 2,400 square feet, which included a recording studio used by Strauss. Since the fire, Strauss says, he has bounced between five different “communal housing situations” but has struggled to find a place for his business. “There’s nowhere to go,” he says.

Strauss founded the Oakland Warehouse Coalition after the Ghost Ship fire, in part to help tenants avoid unlawful evictions during Oakland’s warehouse crackdown. He has a strict philosophy that housing should not be a commodity and can recite passages from the city’s building code from memory. He admonishes me when I suggest that someone is living in a building illegally. “It’s ‘unpermitted occupancy,’” he says. Strauss says Haber has become his main developer target because “he’s the most egregious” and because he touched his life personally. “There are ripple effects of dropping a highly transient group of people in their 20s on the less melanated end of the spectrum into the neighborhood,” he says.

But one such “melanated” person, Elaine Brown, a former Black Panther Party leader who is now an affordable housing developer, took the microphone at the October meeting in support of Haber: “Welcome to the world of black people, Jonah Strauss movement!” She went on to criticize Strauss’s battle to protect housing for artists. “They’re talking about a small little enclave and clique of people…. Black people need a place to live. We are 60 percent of the homeless in this city, and we’re looking to the Danny Habers of the world to help us to have someplace to live that is decent and indeed affordable.”

A few tenants of the Travelers Hotel, a downtown Oakland SRO that Haber purchased, also spoke. One man said that he was offered a generous buyout and that he was treated fairly. Another said Haber made life miserable for those who refused to move out. Robert Salinas, a lawyer representing several former and current tenants, said that a wrongful eviction suit—one of several lawsuits Haber is facing—will go to trial in July if a settlement isn’t reached. The City of Oakland has since passed a temporary moratorium on similar SRO conversions. (Haber declined to comment on that project.)

Haber says he’s learning from his mistakes as he goes, and that the plans for some of his most controversial projects have evolved as he’s gotten feedback from community members. “I wouldn’t know how dire the problem was if I hadn’t done projects like 1919 Market,” he says. “The problem is massive, and I just didn’t know that because it didn’t affect me personally.”


Growing up
on Long Island, Haber always wanted to be an entrepreneur. He attended the University of Wisconsin in Madison, where he majored in real estate and urban land economics. While still a student, he launched an online alcohol-delivery service called Campus Drank, which racked up $400,000 in fines (later reduced to $3,000) for selling booze to minors. After graduating in 2010, he moved to Israel, where he cofounded an Arabic-language financial news website called Nuqudy (“E-Trade merges with the Wall Street Journal,” he says). He left after two years with his sights set on Palo Alto. “I had no friends there,” he says. “I just wanted to do another tech company.”

Finding housing, of course, was his first challenge. After two months of sleeping on a couch, he eventually found a bedroom in a house that he shared with three roommates, a mismatched crew that he describes as a “hippie artist, a drug dealer, and a Silicon Valley guy.” Haber says another friend who worked in tech taught him to code in exchange for working out with him a few times a week at the local YMCA. He used his new coding skills to launch an apartment search website where house seekers could post what they were looking for and be contacted by interested landlords. One day while out getting coffee, he says, he had a chance run-in with Apple CEO Tim Cook. Haber mustered the courage to walk up and ask him for advice about his fledgling business idea. According to Haber, Cook listened. “He said, ‘Do you really believe in the idea? If not, life is too short,’” Haber says. So Haber abandoned the idea and moved to San Francisco. There, a project he did believe in—themed rental houses—eventually hatched.

In 2012, Haber and Alon Gutman, a friend he’d met in Mountain View’s Hacker Dojo, launched the Negev, a company they named for the desert region in Israel. The Negev complexes (only one of which Haber still owns, down from a high of seven) can house up to 60 people and come with shared kitchens, coworking spaces, and dining and movie rooms. There are group-bonding activities like weekend hikes, yoga classes, and Sunday dinners. Housemates are grouped based on their personalities and interests, from “social geeks” to “sports and parties.” When I refer to them as tech-bro dorms, Haber corrects me: They are “themed group-living” homes (and they’re coed, although they skew heavily male). Residents pay between $1,100 and $1,900 a month for basic rooms, some of which stack roommates in bunk beds.

Haber says he’s leaving the Negev behind so he can focus on oWow, but he wants to show me one of the complexes so he can talk about the evolution of his work. The idea for oWow, he says, came partly from learning that the Negev’s residents typically wanted to move in with smaller groups of friends after a couple years in a theme house. “Why not do the building they’re going to next?” he asks.

On a recent weekday afternoon at the Negev house on SoMa’s Sixth Street, about 20 bikes are hanging from a wall in the main living room as a few roommates sit with laptops in the kitchen. In the basement, there’s a makeshift coworking space with a large whiteboard scrawled with phrases like “How do I measure success?” and “Sell partnerships.” The place has the mismatched furniture and last-night’s-beer smell of a frat house, albeit one where everyone listens to TED Talks in their downtime.

A couple blocks away, Haber shows me another Negev house, on Folsom, that he says has a more “party” vibe. The living room and lobby area is filled with about a dozen slouchy black leather couches, a DJ booth, and a graffiti mural of San Francisco’s skyline. From the room next door, I can hear one resident bark at another, “You bastard! You got tickets to Burning Man!” Strauss says he suspects that Haber actually lives in Palo Alto. Haber denies it: He says he still lives in a room in one of the Negev theme houses. “People think I’m a billionaire with all the money in the world,” he says after giving me a ride to his office in his 1998 Mazda sedan, which has a cracked headlight and is littered with empty water bottles.

Still, Haber’s company recently purchased the old Coast Sausage warehouse on Adeline Street in West Oakland, prompting a new round of pushback—this time from preservationists who want the neighborhood to remain a haven for industrial businesses, some of which are flourishing. Haber says he wants to turn the warehouse, abandoned since the 1990s, into live-work apartments with two- and three-bedroom units. “It’s a cool site that’s been empty for a long time,” he says.

Jon Sarriugarte has run his blacksmithing operation out of a nearby warehouse for more than 20 years and hopes to block Haber’s plans, which haven’t yet been approved by the city. The blacksmith, who makes light fixtures for clients like Restoration Hardware, says his work requires a large warehouse space and an urban power grid. “I can’t just go to a farm to do this,” he says. “I need an industrial district in the city, and those are being encroached on.” Sarriugarte believes that plans to turn spaces like this into homes would eventually push his business out of the neighborhood, along with others like it. Haber counters that the units he’s planned for Adeline Street would have thick enough walls and big enough work areas that some industrial work, like welding, could take place there. Sarriugarte doesn’t take Haber at his word. He suggests instead that the developer build something similar elsewhere. “Let’s add this kind of density around BART stations,” he says.

Haber’s nemesis, Jonah Strauss, isn’t even willing to give that much. He says he’d be satisfied only if Haber packed up and left town entirely. “Danny Haber preys on instability,” he says. “I’d like all of his projects to be halted.” In some ways, the animus between Haber and Strauss is a predictable conflict in a place where capitalist entrepreneurs and socialist activists both have passionate supporters. And both are, in their own ways, right. Historically, Oakland’s poorest communities have been victimized by all manner of unscrupulous housing regimes. But Oakland is also desperate for new homes, and Haber is trying to erect hundreds of such units in the kind of building environment that most other developers simply don’t have the stomach for. Haber admits that there are less contentious ways to make a buck. “There are easier industries where you don’t have to deal with the Jonah Strausses” is how he puts it. But “building housing feels like the ultimate entrepreneurial thing to do,” he says. “How do you turn something from nothing into something people like?”

In West Oakland, at least, Haber is still working out the answer.

 

Originally published in the June issue of San Francisco 

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