April 10, 2017
By: Grant Yeatman, Senior Associate, JLL
The Raiders are leaving Oakland…again. This time they are headed to Las Vegas, where, we’re told, a $1.9 billion domed stadium will be built in the desert, or not far from it.
One of the reasons the Raiders wanted to leave the Oakland-Alameda County Coliseum, we’re also told, is because their rent “at the office” skyrocketed last year from $925,000 to $3.5 million. To be sure, that’s a hefty increase, but as our research team found out when they crunched the numbers, it’s still a relative bargain when compared to what corporate tenants pay for workplaces in Oakland.
Oakland-Alameda County Stadium, October 1967. Photo credit here.
Oakland office rents up in first quarter
JLL data shows that average office rents in Oakland’s central business district were $57 per square foot in the first quarter, an increase of 7.3 percent over the prior year period. Yet, even at the highest office rent levels Oakland has ever seen, the city is still attractive compared to San Francisco, where rents still average $73.44 per square foot.
Now, if you build it, they will come
Rents at this level finally make it economically feasible for developers to move dirt on new office buildings in the city, like Ellis Partners and Intercontinental’s 1100 Broadway project. While projects like this won’t be delivered until the Raiders leave town for good, tenants are already staking their claim to Oakland’s new space. Blue Shield just announced plans to move 1,200 employees across the Bay from San Francisco to Oakland in 2019.
Open floor plans, great amenities
Our research team estimates the Coliseum to be about 165,000 square feet. If the Raiders had to go to work in a similar sized office building in Oakland, they would be paying an annual rent almost three times as much as they will pay for the Coliseum in 2017. Put another way, even though the Raiders’ new rent is almost four times what they paid in 2016, it still only amounts to little more than $21 a square foot. Not bad for a workplace that, if it were an office building, could probably command a rent premium because it is amply served by public transit, making it very easy for employees to get to work, not to mention the huge floor plate and views.
There are plenty of office tenants in and around Oakland who would be happy to pay that $21 Coliseum rent today. Perhaps someone should build an office tower there?
About the author:
Grant is a Senior Associate with JLL in the Oakland office. He provides real estate advisory and brokerage services to clients throughout the Bay Area, with a focus on office space for technology clients.
Contact Grant directly by phone at (510) 465-9406 or via email at firstname.lastname@example.org.