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San Francisco

Mixed bag for East Bay office market so far this year

Net absorption up, asking rates down, demand for 3.3M sf seen

Exelixis build-to-suit in Alameda, and downtown Oakland (brick., iStock)
Exelixis build-to-suit in Alameda, and downtown Oakland (brick., iStock)

The East Bay office market delivered mixed results during the first three months of 2022, with net absorption and availability both rising as asking rates ticked down.

The availability rate — which measures the amount of square footage available for lease regardless of whether it’s already vacant — reached 19.1 percent last quarter, up from 18.1 percent at the end of last year and 17.4 percent this time a year ago, according to a CBRE report.

More offices coming to market put downward pressure on asking rates, which dropped nine cents to $4.51 a square foot a month, CBRE data show. The commercial brokerage firm defines the region as nine different submarkets, including four in Oakland along with Alameda, Berkeley, Emeryville, Richmond and San Leandro.

Net absorption rebounded last quarter, as tenants occupied about 123,100 square feet more than they relinquished during the period, a swing from a negative 305,576 square feet in the last three months of 2021. The first-quarter tote was “substantially” buoyed by srmERNST Development Partners and Hillwood Investment Properties delivering a 220,710-square-foot build-to-suit project in Alameda to Exelixis, a biopharmaceutical company, CBRE wrote in its report.

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Stockbridge Capital Group bought the Alameda project from the joint venture for about $159 million last month, one of the East Bay’s notable office sales last quarter, CBRE data show.

Class B office buildings in Oakland’s central business district continued to garner the lion’s share of new leases in the East Bay, continuing the area’s momentum after Callisto Media and Twitter agreed to rent 144,000 square feet there last year, according to CBRE.

The brokerage’s report said it expects leasing activity to ramp up in the region in the coming months, as prospective tenants seeking a total of at least 3.3 million square feet of space in offices and so-called flex properties check the market. CBRE also expects to see further gains in net absorption through the rest of 2022, most of which will stem from the East Bay’s life science sector, the report said.

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Alameda CAEast BayOffice Real EstateTwitter