The number of tenants looking for office space nearly reached pre-pandemic levels in the first quarter of this year, data collected by CBRE shows. However, while businesses are looking for space, they are looking for less of it, as reported by the SF Business Times.
Tenants seeking office space have trended up since July 2022, when roughly 40 to 50 tenants were searching for space in the Oakland market. The number of office searchers spiked into the 50s and 60s in the first quarter, hitting a high of 69 tenants the week of March 29.
The number dropped to 63 this week. However, these are still some of the highest tenant counts since the fourth quarter of 2019. That compares to a low of 32 tenants looking for space in the summer of 2021.
While the demand has returned, tenants are looking for less space than they were four years ago, Scott Greenwood from CBRE told The Business Times. Deals for spaces smaller than 5,000 square feet accounted for approximately 40 percent of all leasing activity in the East Bay in the first quarter, according to data from JLL. And more than half of the tenants currently looking for space in Oakland want less than 10,000 square feet, according to Alexander Quinn from JLL.
What’s missing from the market are tenants who are looking for mid-tier spaces between 20,000 and 50,000 square feet, according to Greenwood. As for large spaces, the last lease for more than 50,000 square feet was Twitter’s deal for its now defunct Oakland office in 2021.
There is no pattern to the type of tenants entering the market, according to Greenwood. Some are existing Oakland tenants who are seeking the same amount of space they had pre-pandemic; others are existing Oakland tenants who want to downsize. Still others are relocating from markets like San Francisco, or are seeking to sign new leases after letting theirs lapse during the pandemic.
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This could be a signal of two things, according to Quinn. First, a growing crowd could want new space in Oakland, or a bunch of companies are downsizing at the same time. Regardless, Greenwood thinks demand is demand.
Downtown Oakland’s office market saw office availability rise to 32.1 percent in the first quarter, while net absorption, a measure of new leased space minus newly vacated space, was approximately negative 221,000 square feet.
— Pawan Naidu