East Bay Office Market Cause for Concern?July 20, 2016
While not specifically quantified, the volume of office tenants in San Francisco seeking new space in the East Bay “dropped significantly” over the past quarter, according to an accounting by Cushman & Wakefield.
And while the drop was partially attributed to a lack of available space, with the vacancy rate in the East Bay office market having just dropped below 8 percent, the uptick San Francisco’s office vacancy rate last quarter, the first in six years, suggests there’s more at play and has raised “some cause for concern.”
We’ll also note that while the average asking rent for office space in Oakland’s Central Business District hit an all-time high in the first quarter of the year, having jumped 36 percent from the first quarter of 2015, it appears to have slipped a couple of pennies over the past quarter and the amount of space available for sublease ticked up from 10,000 to 60,000 square feet but remains a negligible share of the 12 million square foot market.
Comments from Plugged-In Readers
Having seen a few rounds of boom and bust in SF and the bay area, I am not predicting a bust, but the softening cannot be denied.
It’s natural we’ve seen office tenants in San Francisco seeking new space in Oakland slow. Oakland’s CBD vacancy rate currently stands below 4%. Much of what is presently on the market for lease has been picked over and not very desirable to tenants.
Not a terribly flattering photo of 14th/Broadway: in addition to the various weird optical effects, it appears to have been shot on a weekend, when no one’s around (or is that an intended message?)
[Editor’s Note: No slight intended, you’ll have to take it up with Google.]
at least it wasn’t shot during a protest/riot for which this intersection is usually ground zero.
It’s Google Street View. The stitching is weird because its done by computer, and it’s intentionally taken during a low traffic time of day.
Bay area office market has arrived at peak and is now cooling. Submarkets rise and fall together, even if not perfectly synchronized. Markets that were “last in” are “first out.”
It’s a Streetview, come on SocketSIte. Oaklanders with their stuff together do not spend much time at this intersection. condoshopper “riots” are few and far between and even when “riots” do occur we’re not talking the LA or Watts riots of yore.
Tick, tick, tick…
OK, a respectable period of mourning (for the end of the boom) has passed, now let’s say what’s REALLY on every Oaklandista’s mind: Shorenstein et al., – whose presence in Oakland was often cited as a good thing b/c it meant the “big boys” were interested in the Eastbay – have sat on their collective…undeveloped dirt piles thru the whole of the hot times and now the game is up. First the excu..er, raison du jour was that nobody was interested in Oakland, then that they were but construction “didn’t pencil out” – which of course was largely due a collective shortage of space in the Bay Area causing rents to soar > which caused construction costs to soar, now it will be that the market has cooled.
Meanwhile most of the action has been from groups like Lane Partners – rehab, not new construction, but still something called “showing initiative” – who by a great coincidence have little/no property in downtown SF, and so little incentive to keep rents on an existing portfolio high by stymieing developing of alternative markets like DO…which seems much like the 1980’s when the development of several million square feet of space (mostly in the Lake Merritt submarket) was spearheaded by Canadian and other off-market players who – again that big coincidence – also had little Bay Area presence and little incentive to preserve the status quo.
So let’s offer up again the provocative idea that SF players moving into Oakland isn’t a good thing for the latter, but rather a ticket to nowheresville.
Well said. People with a vested interest in Downtown Oakland, residents and businesses alike, need to organize and demand something better than murals at the 1100 Broadway and 601 (11th) City Center sites. These land banked projects are demoralizing.
Georgist Land Taxes? Why not use the tax system as a disincentive to sit on vacant land?
The streets of Oakland are generally deserted, even at rush hour. A lot of them are just ludicrously wide in light of the absence of traffic.
That is true, but the sidewalks are increasingly crowded. 😉
Confirmed, 5 years later Oakland still sucks. Not QUITE as bad as it did, but still. It’s barely even Brooklyn. More like the Bronx. You don’t easily or quickly shrug off decades of blight.
More like Jersey, TBH.1
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