Oakland Retail Market Report

Vacancy continues to climb upward. Large-scale move-outs continue to hinder market conditions in Oakland’s retail sector. Entering 2023, annual net absorption has been in the red for four consecutive years. While this stretch of negative space demand is unprecedented, the metro’s vacancy rate remains below the historical high achieved during the aftermath of the Global Financial Crisis, aided by moderate development. Availability is tightest inside the city of Oakland and in areas along the 880 Corridor, where local vacancy was at least 140 basis points below the market average as of the fourth quarter in 2022. Heading into this year, widespread inflation and rising interest rates are expected to slow wage and job growth across the metro in the near term. The negative impact these factors will have on discretionary spending and leasing activity will serve as headwinds to the retail sector, resulting in the fifth consecutive year of annual vacancy expansion in the East Bay. However, the long-term outlook is more optimistic, as BART’s ongoing extension to San Jose will expand commuting options for Oakland residents, and regional affordability continues to draw net in-migration to the area. These factors should help broaden the local consumer base and provide tailwinds for overall retail market performance.