Newark sets its sights on post-pandemic recovery in 2023

Anne Stedler

The COVID-19 pandemic is no longer in full swing, but it still took a toll on the city of Newark’s economy during the past year. Government officials, like the economic development manager, are working with business owners to figure out how they can collectively usher in a recovery during the coming year.

Anne Stedler told the Newark City Council on Jan. 12 that the city is focusing on supporting its small businesses, helping facilitate the recovery of the city’s hotel and retail industries, staying competitive in terms of its land use development and workforce, and further developing communication and collaboration with the business community. The city’s consultants have already begun working with the hotel industry to create a work plan to address its speed of recovery.

“Our goal is to restore hotel revenue and transit occupancy tax,” Stedler said, referring to the tax that is collected by the city whenever people stay overnight at Newark hotels, short-term rentals and the like. “What we want is the biggest share for Newark that we can accomplish in a recovering economy.”

Newark’s hotels have been competitive in terms of the hotel industry in the whole Bay Area, she said, but occupancy and room rates are still lagging behind pre-pandemic levels.

Commercial, retail space

The growth of Silicon Valley is creating pressure on Newark’s commercial space, which is almost entirely occupied. Of the city’s 9.1 million square feet of research-and-development, advanced manufacturing, logistics and warehouse space, Stedler said only 1.8% was vacant as of the end of 2022. A year earlier, the vacancy rate was 3.2%.

“So you can see our vacancy has reduced,” Stedler said, “and we’re in an excellent position to support new development were it to occur.”

Looking forward, Stedler said the city is expecting to consider approving a proposal from global real estate company Prologis Applied for 300,000 square feet of new commercial space on the corner of Central Avenue and Sycamore Street. The challenge is that the land that is best suited for industrial uses is either undeveloped, such as a parking lot, or it’s marginally developed, such as a very old warehouse, but Stedler said the city is working with interested property owners on making that transition.

Retail vacancies, on the other hand, have been a long-term concern since “the economy, itself, has thrown retail into turmoil,” Stedler said. Finding businesses to fill those spaces isn’t as easy as it was a couple decades ago, particularly the two large spaces on the corner of Newark Boulevard and Jarvis Avenue.

The process of getting a tenant to fill a vacant space can take two years when you factor in negotiating the lease, design and construction, she said.

“So we have challenges for ourselves,” Stedler said, “and yet we respect the fact that retail properties are assets for us. Retail is an amenity for our citizens, it contributes a sense of identity and it contributes taxes — they’re important for our bottom line.”

Small business

The past couple years weren’t as extreme for small businesses as 2020, when many businesses were forced to close their doors, but they still weren’t easy either, said Michael Cohen, owner of consultant Spectrum Small Business Services, who the city hired to work with the small business community.

“There were still enough challenges that there was still a lot of fear among small businesses of going out of business,” Cohen said. “And a lot of these people had been in business for quite some time, a large percentage for more than 10 years.”

Businesses had a strong need for cash because revenues remained depressed and back rents accumulated into large, unmanageable debts, Cohen said, adding businesses expressed an interest in developing more effective marketing.

The Exceptional COVID Grant Program, which offered small businesses grants of up to $20,000, made a big difference in the ability of the recipients to survive, Cohen said; about 95% of the city’s small businesses reported they are expecting to stay in business. Before the program, 41 businesses had $1.3 million in back rent between them, but after the program that was reduced to 16 businesses that now collectively owe about $500,000 in back rent. Newark’s small business community also benefited from other county and state relief funds, he said.

On top of one-on-one consultations, Cohen said his firm conducted two different types of group workshops on financial resiliency and digital marketing.

Going into 2023, Cohen said small businesses are expecting to still be dealing with stagnating profits, cost increases and employee shortages.

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