Hines Hits Pause on 39-Story Oakland Office Tower

Houston-based Hines has halted its massive office project in Downtown Oakland, according to people familiar with the project, while Oakland’s office market struggles with millions of square feet left vacant.

Hines’ 39-story project would have been the tallest office tower in the East Bay. The development was located at 415 East 20th Street, and plans were to bring more than 800,000 square feet of office to the Oakland market.

“The location of our project is where the City of Oakland wants a high-density office,” Paul Paradis, former senior managing director at Hines, told TRD last year. “Moreover, Oakland is starved for new Class A office space.”

However, Hines’ has decided not to move forward with the project for now because “it’s not economically feasible to develop in the current market,” a source who requested anonymity told TRD.

When Hines was working to secure the permits and entitlements last year, the office market had yet to recover from the pandemic. Vacancy in the city center submarket reached nearly 32 percent in the third quarter, up 4 percent year-to-date, with Class A buildings having an even higher vacancy at 37 percent. That equates to more than 2 million square feet of empty office space.

The expectation was as the economy moved further beyond the pandemic, the market would stabilize and the vacancy would start to fall. However, a year later vacancy has grown larger. Office vacancy in the core business district of Downtown Oakland, Uptown and Lake Merritt hit 36 percent in the second quarter. The climb in empty space marks the fourth quarter for rising office vacancies within the 6.3-million-square-foot submarket.

Hines told TRD that the firm plans to pursue its office development.

“Hines continues to be fully committed to the project,” a company representative said. “We are dedicating significant time and resources to ensure its success, and evaluating all options including future development.”

While Hines is leaving future development on the table, it has considered other uses for the land. The site was one of three offered for sale to BART to house the public transit agency’s police department. The offers came in response to a June 1 request for proposals from the agency seeking a new police headquarters.