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As tenants rethink their workplace strategies, pain for the office market in the San Francisco Bay Area continues, spreading across the bay to Oakland, where just 221K SF of offices are under construction.
Before the pandemic, Oakland benefited from the overflow of brimming San Francisco, where office space couldn't be built fast enough to keep up with demand. With lower costs and more available space, Oakland offered an alternative for office development.
But as office development has stalled in San Francisco and many large cities across the country, Oakland's pipeline has similarly slowed, according to Q2 office market reports from CBRE and Avison Young.
Office construction completions for the second quarter of this year dropped from over 700K SF in 2019, although the 221K SF delivered last quarter represented an increase from the same period in the previous year, when developers finished 100K SF of offices in the East Bay.
With stagnant office demand, vacancy rates hover around the 20% mark across San Francisco, and Oakland’s own office vacancy illustrates similarly decreased demand from prospective tenants.
CBRE’s Q2 office figures for Oakland show an increase in the city’s office vacancy rate, jumping to 16.2% from the previous quarter. The Oakland report is composed of several East Bay metro submarkets, including Emeryville, Alameda, Berkeley and San Leandro, which saw varying vacancy rates. Alameda’s hovered just below 7% on the low end of the vacancy spectrum while Emeryville’s sat just below 17%.
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