The office vacancy rate in the East Bay, not including Walnut Creek or further east, ticked up to 18.4 percent at the end of last year, roughly double the vacancy rate prior to the pandemic.
In addition to 4.9 million square feet of un-leased space, the current vacancy rate includes an additional 1.2 million square feet of space which has been leased but is actively being offered for sublet, with an office vacancy rate of 34.1 percent in Oakland’s City Center Core, according to Cushman & Wakefield.
Despite the rise in vacant office space, the average asking rent only inched down eight (8) cents to $4.58 per square foot per month, with East Bay landlords still trying to hold firm on asking rents while offering free rent and build out allowances to reduce effective rents without signaling a mass decline. The average asking rent for Oakland’s Central Business District has, however, dropped around 10 percent from its pre-pandemic high and is trending down.
“Given that vacancy in [Oakland’s Central Business District] has more than doubled…it is surprising that the pricing adjustment has not been more significant, particularly within the Class B and commodity Class A product types. The first factor holding up rents has been a notable flight to quality. To draw employees back to the office, tenants are drawn to the highest quality spaces, and as they often downsize their footprint, they become less price sensitive. The other is landlords’ inability or unwillingness to drop rates. A wave of refinancing and sale activity in the years before Covid-19 have left many landlords at a basis where they are unable to lower rates and still make their investments pencil, even in the face of rising vacancy.”
And once again, the aforementioned trends and landlord challenges aren’t limited to Oakland, as plugged-in people should be well aware. We’ll keep you posted and plugged-in.
SocketSite seems to cover Oakland whenever it’s failing at something while pretty much ignoring Oakland development news overall. Here are just a few of the interesting developments in Oakland in the last six months…
The new Samuel Merritt University campus in DTO is moving forward w/ great momentum. A lot has happened at Brooklyn Basin since your last report back in 2018! Phase 1 has a tailwind and the last parcel will likely see a ground breaking in 2023. 419 4th St in JLS will feature historic preservation and a nice dose of increased density. There’s a controversial proposal for a midrise on (bustling) Piedmont Ave, not far from a nearly complete One Piedmont. 820 W MacArthur is a substantial development in Oakland near a cluster of new housing taking off in Emeryville. Then there’s probably a dozen large, like 1/2 to full block, affordable housing developments moving forward in East and West Oakland. Did I miss the story about Oakland becoming one of only seven CA jurisdictions to earn a Prohousing Designation from the State of California?
I do really enjoy this site, but there’s such a blind spot needing to be addressed…
To be fair, it does bill itself as a place for “San Francisco Real Estate Tips, Trends and the Local Scoop” so Oakland coverage should perhaps be viewed as a bonus.
That having been said, it might make sense to do (more) follow-up on projects like this rather than leave off at the development stage…particularly as there’s so little new development being announced.
Construction on that project has been ongoing since early 2019 and has provided nothing but nuisance and blight. It contributed to the recent crimewave in the neighborhood. The planned use was Giant Tech Bro Warehouse with beds that drop down from the ceilings, pitched at the cube pukes promised to invade the Sears building, which currently sits as the world’s largest Shake Shack.
At least a year until it’s finished, when we can welcome yet another urban gated community, fueled by Doordash, flush with more vacant retail space. They’ll slap some big pictures of black people on its empty windows, while black people sleep on the street.
From what I gather all the blocks around West Oakland BART remain on the drawing board, as funding cannot be secured. Red-lining via investment bank.
It contributed to the recent crimewave in the neighborhood
do tell!
Happy to discuss that privately, along with some temporary remedies we fought to secure. But not on a public forum. Snitches get stitches, you know.
Yeah I believe Socketsite dropped its Witness Protection Program…sad!!
Can i get a witness?
It’d be nice for SS to do more follow-up of major projects in SF. The “rest of the story” can take unexpected twists and turns. For instance, the Tennis Club development was set to break ground. Covid hit, Pinterest pulled out and then the developer sought to convert the project to biotech space. To do so the tennis court part of the development would have to be eliminated. The City said no and the project’s entitlement has since been put up for sale. Or Pier 70 which was supposed to break ground with Phase 1 last year but, given the questions around vertical development, missed the deadline to start. Just prior to Covid Google was in talks to lease all the 2 million feet of office space. That fell through. Brookfield ended up renegotiating the development agreement with the City and now has until 2026 to start Phae 1.
In other words, those projects are effectively back to where they were when we last covered them, with a bunch of noise along the way…
Agree. Especially as major new development has come to a near halt in SF. Additionally, SS should do some coverage of northern San Mateo County as well. There are millions of feet of biotech/office space proposed or in development in the north half of the county. Ground was recently broken on a million-foot lab/office development in SSF on El Camino across from the See’s factory. An expansion of biotech/office development to El Camino from SSF to San Bruno – where Tanforan will be replaced by a multi-million-foot office/bio-tech campus – is underway. Lots of housing in the works also.
Moreso than Oakland, the massive growth in jobs in San Mateo County as these projects are completed will impact SF in various ways.
I see the biotech in northern San Mateo County continuing to grow. Oakland is close to UCB – has lots of good big empty buildings suitable to conversion to life sciences- and the City govt has tried to get some of these firms in over the years – but the crime thing is real. Companies with other options don’t want to be down there.