Oakland Office Tenants Seek “Flight to Value,” Not Quality

Oakland’s office market is showing early signs of stabilization after years of decline, with Class B buildings leading the momentum, according to a new study from brokerage Colliers.

Once overlooked, these mid‑tier properties — such as the Leamington and Breuner buildings — were renovated during the last investment cycle when value‑add buyers upgraded lobbies and interiors, the San Francisco Business Times reported. Despite struggling to attract tenants through 2025, they are now benefiting from a “flight to value” as companies prioritize affordability over prestige.

In the first quarter of this year, the Oakland market recorded positive net absorption of 13,000 square feet, reversing five years of negative totals and signaling a tentative recovery, Colliers found. Vacancy fell from 21.7 percent to 19.6 percent, largely because no major tenants vacated large blocks of space — a pattern that had persisted since the pandemic.

Leasing activity remains cautious, with most deals between 5,000 and 10,000 square feet, as tenants seek short‑term flexibility and maximum value. Landlords continue to offer concessions, rent discounts and flexible terms to attract occupants, the study found.

Colliers’ Anthony Shell described the environment as “defensive,” noting that while stabilization is underway, true recovery will require sustained demand and deeper absorption. The largest leases last quarter included MIRI’s 10,383‑square‑foot renewal at 2150 Shattuck Avenue in Berkeley and Grid Alternatives’ 10,000‑square‑foot direct lease in Emeryville.

“We’re seeing a flight to value, not a flight to quality,” Shell told the Business Times.

Capital markets activity also strengthened. During the most recent quarter, 601 City Center and the Leamington Building changed hands, resetting valuations and drawing new leasing strategies. Kennedy Wilson, which acquired 601 City Center, enlisted Colliers to market its 240,000 square feet of vacant space, offering competitive rents to accelerate occupancy.

Shell compared the trend to San Francisco’s post‑pandemic rebound, where institutional investors like Redco acquired quality assets at steep discounts. He said major capital groups are now watching Oakland, viewing it as a market with strong fundamentals and attractive pricing. Currently owners such as Highbridge Equity Partners and HP Investors face defaults.

The shift toward renovated Class B offices and smaller, value‑driven leases underscores a market recalibration that could mark the beginning of Oakland’s long‑awaited office recovery.

– Joel Russell