From event cancellations to local business closures, the onset of the COVID-19 pandemic has taken a toll on Berkeley’s economic makeup.
Unemployment, vacancy rates and other general economic trends across Berkeley are outlined through the city’s economic dashboards. The dashboards are updated with reports provided by the city’s Office of Economic Development, or OED.
The dashboards reported a tripling in the unemployment rate from 2019-20, increasing to 7.6% and thousands of job losses, according to Berkeley Mayor Jesse Arreguín. Businesses within the hospitality, arts, food, retail and personal service industries have experienced the greatest levels of unemployment, according to the dashboards.
Additionally, a substantial decline of 13.2% in sales tax revenues was reported and is largely attributed to drops in sales in the food and retail sector due to the restrictiveness of COVID-19 safety measures, according to Arreguín. With these losses, Arreguín said, the city experienced a $40 million deficit last June but achieved a balanced budget, primarily through deferrals.
In an attempt to assist businesses, the city and OED ran a Berkeley Relief Fund that raised $3 million in city funding as well as more than $1.5 million in private donations to provide relief to tenants, small businesses and arts organizations.
“In total, 700 businesses and 63 arts organizations were provided grants through this program,” Arreguín said in an email. “The City also provided assistance and grants in setting up parklets for outdoor commerce and dining, and helped in several marketing campaigns to support local businesses.”
According to David Mayeri, founder and CEO of UC Theatre, the city has been generous in its support for the theater, helping maintain several of its programs as the theatre struggles to stay financially stable in the face of show cancellations and capacity restrictions.
The lack of a concert scene due to the pandemic has negatively impacted the local economy, according to Mayeri, as the scene brought foot traffic and customers for surrounding businesses.
“Think of local music venues and performing arts theatres as the anchor tenant in their communities,” Mayeri said in an email. “We create primary and secondary jobs – show related venue jobs, vendor jobs, performing artist jobs, and jobs at local businesses. We drive economic recovery in the communities we live and work in and generate substantial economic impact to restaurants, bars, retail, parking, hotels, etc.”
Before the pandemic, local venues contributed at least $14 per ticket sale to the local economy, and the UC Theatre previously generated at least $1.4 million for the local economy for every 100,000 tickets sold annually, according to Mayeri.
For Alex Knox, executive director of the Telegraph Business Improvement District, it has been difficult to observe the struggle of local businesses as they make adjustments to their operations and contemplate closures.
With a majority of data collected from small businesses, the dashboards showed an increase in vacancy rates across both office and ground floor commercial spaces.
Despite economic and pandemic difficulties, Knox said some businesses, particularly retail and apparel stores such as Mars Mercantile, Indigo Vintage Cooperative and Berkeley Hat Company, are performing well. There are several businesses within the district that exceeded performances in 2020 than in 2019, Knox added.
“Even though traffic counts might be relatively low, it (Telegraph District) still has the character and feel that it always has,” Knox said. “It’s really encouraging to see the significance of the place and its character. It’s not something that goes away just because of the pandemic.”
However, economic conditions are expected to improve as Berkeley’s innovation sector saw significant increases in investments obtained by STEM and biotechnology companies. Some estimates showed venture capital funding in biotechnology to have quadrupled in the last seven years, according to the dashboard.
As a result, startups continue to grow in Berkeley, with the city hosting more than 400 startups in the research and development field, according to Arreguín.
“In 2020 Berkeley startups raised more than $700 million through venture, angel-backed financing and convertible securities and 10 Berkeley companies received nearly $6 million in federal grants for R&D (research and development) activities,” the dashboard reads. “More than a third of Berkeley innovation companies are in the biotech and healthcare sectors, industries that witnessed tremendous global investment in 2020.”
Both Arreguín and Knox anticipate a rebound for the economy and local businesses. A sustainable revival of the city’s economy will be due to Berkeley’s economic diversity and accomplishments in the innovation sector, according to Eleanor Hollander, acting manager of the OED.