Located within one of the hottest economic regions in the U.S. , the suburban East Bay is at a pivotal point in the office market. Previously overshadowed by the booming high-tech hubs of San Francisco and Silicon Valley, the suburban East Bay is beginning to shine on its own. All of the jobs lost in the recession were recovered as of April 2014, and employers are optimistic about continued hiring; who wouldn’t be when you’re in a market that boasts the highest number of millennials with college degrees entering the labor market? In turn, increased demand for office space, especially in the five premiere locations—Downtown Walnut Creek, Pleasant Hill BART, Concord, San Ramon-Bishop Ranch, and Pleasanton-North—is creating a competitive leasing environment for tenants, but boosting confidence among landlords. And these top-ranking submarkets were not chosen at random for the JLL East Bay Suburban Office Report. They were picked because they’re either located on a BART line or near a BART station, have a dynamic amenities base, and these five submarkets have consistently outperformed in terms of leasing activity in the past 18 months.
While healthcare and professional services have long anchored the office buildings in these chosen submarkets, other industries are beginning to emerge as well. High-tech software and cloud companies are committing to a long-term relationship with the East Bay. For example, the software high-tech giant, Ellie Mae, just renewed its commitment to the market by signing a 105,000 square-foot lease at Rosewood Commons in the Pleasanton-North submarket. Furthermore, Workday Inc. just solidified its commitment to the market by renewing more than 200,000 square feet at Pleasanton Corporate Commons. These major lease transactions are ones that have influenced landlords to push rental rates up by 15 percent year-over-year, and have served as the first domino in the ripple effect of tenant demand that should continue in 2015.
So what is so alluring about the East Bay Suburbs over the dominant San Francisco and Silicon Valley markets? The East Bay remains attractive to employers because of its access to a strong labor pool, the same one that surrounding markets are tapping. And for employees it remains attractive for its affordability, livability, as well as the live-work-play environments that submarkets like Downtown Walnut Creek offer. This report gives detailed insight on each submarket in terms of activity, rental rates, tenant demand, and other important office market indicators. Moreover, it highlights the outlook for each submarket over the next 12 to 18 months and offers predications on what lies ahead.