Caltrain-Adjacent Offices Attract Tenants Across Bay Area

Office buildings in walkable areas near Caltrain are increasingly attracting tenants looking to take advantage of their central locations.

In the fourth quarter across the Peninsula, up to 90 percent of leasing was in high-end buildings in walkable locations near transit and amenities, the San Francisco Business Times reported, citing data from Colliers.

Much of the older office inventory in the region hasn’t seen as much activity, according to the Business Times. With office construction slowing in the area, office users could soon run into a shortage of new, top-tier space in the Peninsula and Silicon Valley.

Roblox’s newest offices in San Mateo are one instance of a company doubling down on transit-oriented offices. The online gaming company expanded by 112,000 square feet at Bay Meadows in offices surrounded by housing, shops and Caltrain.

North of San Mateo in Burlingame, fintech firm Upstart Holdings leased 54,000 square feet at the newly built 220 Park, a six-story office building near Burlingame’s Caltrain station. CBRE’s coworking company Industrious is also at 220 Park, signing a lease last quarter for 19,800 square feet.

In Redwood City, law firm Paul Hastings is planning to move into 45,000 square feet as the company doubles down on offices in transit-adjacent areas across the country, according to the Business Times. And in Sunnyvale, Databricks has continued its Bay Area expansion with three floors at Cityline’s seven-story 250 West Washington Avenue, bringing its total footprint at the Cityline development near the Sunnyvale Caltrain station to 455,000 square feet.

Last year, Gov. Gavin Newsom signed Senate Bill 79, which increased zoning in areas near transit stops, allowing developers to build residential structures between six and nine stories within a half-mile of bus and train stops. The goal with the legislation is ostensibly to incentivize developers to initiate new projects near those transportation connections.

Landlords overall filled 17,674 square feet in the quarter, marking the second consecutive quarter of positive absorption when more space was leased than vacated. In total, office vacancy in the Peninsula rose to 19.2 percent in the fourth quarter, while asking rents dropped 5 percent quarter-over-quarter. The vacancy increase can be partially attributed to Oracle’s decision to vacate 294,000 square feet at its longtime Redwood City campus, per the Business Times.

— Chris Malone Méndez