Marcus & Millichap

Oakland Office Investment Forecast

Oakland Metro Area, 2017 Outlook

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Tech Sector Growing, Filling East Bay Offices; Downtown Oakland Captures Investment Capital

Rents and vacancy improve amid tech boom; builders shift focus to redevelopment projects. The Oakland office sector is firmly in expansion mode as robust job growth and relative space affordability bolster market fundamentals. Though many expanding companies tap the East Bay as a lower cost alternative to San Francisco and San Jose, Oakland’s success is not simply the byproduct of Bay Area overflow. The metro boasts a thriving startup culture and a strong demographic profile, helping fuel underlying space demand. Though demand is strong, rent levels are not high enough to justify new construction, resulting in an elongated lack of supply. Although builders remain hesitant to pursue new ground-up office development, renovation projects are abundant. Uber’s $40 million overhaul of the historic Sears building in Uptown is the most prominent example. The development will be completed this year with the ride-sharing giant expected to host between 2,000 and 3,000 jobs at the location. The move will help solidify Oakland as a marquee tech hub, likely spurring further business expansion in the area. Another year of minimal construction activity will direct new and expanding tenants into existing space, exerting downward pressure on vacancy and lifting rents.

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