California’s East Bay office sector is recording significant activity levels amidst large sales and high asking rents, even as fundamentals show some softening, a new Infabode study reveals.
Overall vacancies have increased from 12.4 percent in 2018 to 13.2 percent, and leasing activity dropped 20 percent. Despite an increase in vacancies, 942,067 square feet of projects are expected for the future, and growth in the region also has seen a year-over-year increase of 1.8 percent. The dissonance indicates an underlying uncertainty in the true strength of demand.
With an average rental asking rate of $5.15 per square foot, Oakland class A rents ranked as the highest in the East Bay. Direct class A average rents averaged $4.01 per square foot, followed by class B at $3.26 per square foot and $2 per square foot for class C. The rental asking rate for the region was $3.58 per square foot for the region.
Investors should watch the vacancy rate of the market as a whole, which could start cooling off after trending upward for the past two quarters, cautioned the Infabode report. The report cautions investors not to overlook overall sales volume either, which hit more than $700 million this quarter.
To read the full report, click here.