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Market Report

Oakland Office Market Report

2024 Investment Forecast

Office Rents Rebalancing Amid Higher Vacancy,
Prompting a Marked Reduction in Development

Lower lease costs may help stabilize demand. Net absorption is expected to remain in the red for a fifth straight year as additional leases signed prior to 2020 expire. Nevertheless, the 2024 net relinquishment of office space will be the least severe since the onset of the pandemic. Contributing to this relative improvement, a rapidly shrinking construction pipeline is helping curtail supply-side pressure. Combining the 2023 and 2024 delivery slates, the 24-month total will fail to surpass any annual interval across the prior decade, providing a much-needed backstop for the Class A segment. Upper-tier vacancy surged by over 1,000 basis points between 2020 and 2023. Softer demand, meanwhile, is creating downward pressure on office rents spanning all segments, with the market’s overall average asking rate on track to reach a seven-year low in 2024. While this is creating significant hurdles for operators, it may also attract new tenants and encourage lease renewals. For instance, the 80 and 880 Corridor submarkets witnessed the sharpest rent declines of late, accompanied by below-market average vacancy rates to start this year.
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