Oakland Q1 Office Market Report & Forecast
Cautious Optimism Defines Oakland Office Market
Despite rather disappointing absorption numbers throughout many of the submarkets in the Oakland Metro region, asking rental rates were up on average 4 percent when compared to the end of 2013. Cautious optimism seems to be contagious as everyone in the East Bay patiently awaits the influx of tenants fleeing the hottest real estate market in the country. Property owners in downtown Oakland are probably the most anxious as several of them recently got into the game. Ellis Partners is no stranger to Oakland but its acquisition of 1111 Broadway is the first Class A investment by the firm in Oakland in a number of years. As reported last quarter, Harvest Properties also entered the Oakland - Downtown submarket with its purchase of 555 12th Street. Finally, Divco’s purchase of Lake Merritt Plaza completes the trifecta of Class A trades in the last ninety days. All three of these projects sold for approximately $270 per square foot. While this pricing is well below replacement costs it portends a strong belief that rents are poised for growth. Rumors abound of rent quotes in the low $40’s per square foot. We expect office investment activity to remain strong throughout 2014.