The vacancy rate for office space in Oakland’s Central Business District has dropped from 9.6 to 7.5 percent over the past six months and demand for East Bay office space is hovering around 2 million square feet, which is twice the historic norm and nearing the record 2.5 million mark of net absorption recorded at the height of the dotcom boom, according to DTZ.
In San Francisco, the demand for office space is at an all-time high and office rents have increased 15 percent over the past year and nearly doubled since the first quarter of 2010, a spike which has started to drive firms concerned about profitability, versus simply growth, out of the city and following in the footsteps of non-profits for which San Francisco has become too expensive from which to operate.
At the same time, office rents in Oakland have only increased 1 percent over the past year and are currently running at half the cost of being in San Francisco. And with a vacancy rate which is twice as high (14 percent), Oakland is poised to be one of the biggest beneficiaries of the tech clustering around San Francisco, especially considering the number of tech company employees and other professionals who are increasingly calling the East Bay home.
The average asking rent for office space in Oakland’s Central Business District is currently running around $3.20 per square foot versus an average of $5.56 per foot across San Francisco.