July 13, 2016
By: Kristina Sanderson, Marketing Director, JLL
The economic growth we’ve seen in the Bay Area in the last five years has driven demand for office space throughout the region, with tech leading that trend. San Francisco and Silicon Valley have captured the lion’s share of this demand, but with little space left in those markets, tenants are now looking to Oakland and the East Bay to expand.
Amber Schiada, Vice President and Director of Research for JLL’s Northern California and Rocky Mountain regions recently sat down with KTVU Fox 2 Live morning news anchors Gasia Mikaelian and Mike Mibach to discuss the release of JLL’s mid-year Skyline Report, the local economy and Bay Area commercial real estate trends.
Video credit: KTVU Fox 2 News
“A rising tide lifts all boats and that’s what’s happened in Oakland” says Schiada. “For a variety of reasons — the restaurants, housing, being closer to their employee base, and cost — companies want to be here.”
- Rents in San Francisco are now averaging $95 per square foot on an annual basis, including new development space. In Oakland, rents are at historic highs but less than half the price, at $55 per square foot per year. Still, this is an increase of 30 percent in the last year.
- There is little space left to lease in Oakland, with a vacancy rate of 3.6 percent, or just 290,000 square feet, and this lack of supply is driving historically high rent figures.
- While San Francisco may be more expensive, it will offer supply options in the next 18 to 24 months as 4.5 million square feet of space delivers, and only two thirds of that space is still available for lease in developments that include Park Tower, 181 Fremont, and the Exchange.
- Currently there is no ground up development in Oakland, but this week it was announced that 2150 Webster would begin undergoing renovations soon that would add another 288,000 square feet of supply to Oakland. Still, it won’t be enough to satisfy the more than 3.0 million square feet of requirements looking for space in Oakland today. Those who want to expand into the East Bay will have to go south to the San Leandro Tech Center, or to the east bay suburbs.