August 10, 2016
By: Ryan Mathews, Marketing Manager, JLL
All-in-all, demand for corporate office space is proving incredibly resilient around the world. According to JLL’s Global Office Index-Q2 2016 report rents on prime office assets across 110 markets covered worldwide increased 3.6% year-on-year in the second quarter, the fastest pace of annual growth in four years.
Nowhere was this trend more apparent than in Oakland, which had the largest annual rate of rent growth in its office sector of any market in the world–35.4%.
You read that correctly. As the chart above shows, office rents rose more in Oakland over the last year than in Dublin (Ireland), Dubai; Sydney; Los Angeles, Atlanta, the Texas tech capital of Austin and Hong Kong. San Francisco, London and New York City didn’t even break the Top 10.
Now, average rents are far higher in San Francisco than Oakland, and that’s one reason rents have risen so quickly across the Bay. As JLL’s East Migration Outlook report also goes on to show, almost 100 firms have moved to, or substantially grown their presence in the East Bay since 2010. While firms have looked at submarkets throughout the east Bay, such as Emeryville, Berkeley, Pleasanton and Walnut Creek, many of those firms including major players such as Uber, have committed to downtown Oakland, virtually filling the city up. Total vacancy in Oakland’s 12MSF CBD market was just 3.4 percent at the end of the second quarter.
Oakland, and indeed the broader East Bay, has benefitted from San Francisco’s tremendous tech sector growth and run up in office rents – overall rents in the East Bay are 50 percent lower than across the Bay Bridge. Yet, beyond the pure economics, it shouldn’t be forgotten that the East Bay houses much of the Bay Area’s working population – including a fifth of the entire regional Millennial population — and 58 percent of all Bay Area-based degree (Bachelor’s and higher) earners reside in the East Bay. Clearly, these aren’t facts lost on Bay Area corporate employers.
Explore the JLL Global Perspective website, find out how individual office markets performed, or download our latest Global Office Index that covers 100 cities globally.