By: Amber Schiada and Katherine Billingsley | JLL
There’s definitely a lot of excitement surrounding Oakland these days, and it seems like that’s only going to increase since Uber announced their purchase of Uptown Station from Lane Partners last month.
Pictured above: Uptown Station | Oakland, CA
So, why is Oakland gaining favor these days?
The easy answer: San Francisco is expensive. Apartments are unaffordable for most; brunch lines are out the door. The city is crowded and expensive. And it seems like all the cool people are moving to Oakland – artists, makers, students, and new migrants to the Bay Area. Sadly, many of these people can’t really afford $3,500 a month for rent.
It turns out that we’re also seeing an increase in migration on the office side, too. Office rents have already doubled in this this cycle and continue to increase, putting many business in a tough position and faced with a tough decision: stay in San Francisco or move to the East Bay?
Right now we’re tracking about 2.0 million square feet of tenants looking at Oakland from outside the market. Many of these tenants are from San Francisco. With a pricing discount of about 50%, Downtown Oakland is an interesting option. Already we’ve recorded about 1.1 million square feet of deals from firms coming from outside the market.
In Oakland, you have access to the same talent pool. You have a city that’s added more than 200 retailers and restaurants in the last year. You have a city with a soul; you have a city that’s gritty, authentic, and bootstrapping. These are the soft factors that are difficult to quantify, but you can feel them when you’re in a market. Places like Nashville, Austin, Portland, and Brooklyn. These are places that when you’re there you just feel like you’re in a really exciting place and you can feel the buzz. Oakland is one of these places and the buzz is getting louder.
We expect more investment activity to follow, especially as offerings in San Francisco become too pricey for investors. Many value-add and opportunistic plays are available, and with sale pricing ranging from $200-$300 per square foot, investors are definitely taking note.