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Fresno’s office market is insulated from the worst market swings seen in the coastal markets, propped up by a trinity of sectors \u2014\u00a0health care, education and government. <\/p>\n
Fresno\u2019s office market entered the new year on relatively firm footing, led by health care, education and government users even as national markets deal with increased vacancies and uncertain return-to-office trends.<\/p>\n
\u201cIt\u2019s not what I\u2019d call great, but it could be a heck of a lot worse,\u201d said Bobby Fena, senior vice president and principal at Colliers International. \u201cWhen you compare the Central Valley to the Bay Area, things happen quickly in those markets. It doesn\u2019t move that fast in the Valley.\u201d<\/p>\n
Fena said Fresno\u2019s slower cycle has insulated the region from the swings that are seen in the coastal metros. While the Bay Area office vacancy has risen above 30%, Fresno and Clovis metro remain around 8 and 9%.<\/p>\n
Health care continues to be a standout in the market. Fena pointed to the sustained development around Clovis Community Medical Center, where medical and dental offices continue to fill up quickly.<\/p>\n
\u201cThose buildings, as quickly as they get built, they\u2019re filling up,\u201d he said. \u201cIf you\u2019re trying to find existing office space anywhere in Clovis, particularly medical or dental office space, it\u2019s really hard to find.\u201d<\/p>\n
Veronica Stumpf, a broker with Stumpf and Company Real Estate and a Certified Commercial Investment Member (CCIM) designee, described the Fresno office market as being in the late recovery and early expansion.<\/p>\n
Like Fena, Stumpf said that asking rents have remained steady compared to those in San Francisco and Los Angeles, but noted that competition is heating up for modern, high-quality space.<\/p>\n
\u201cThere\u2019s a growing demand for Class A office space,\u201d Stumpf said. \u201cBut Class A office space only makes up about 7% of the total inventory, so it\u2019s very competitive.\u201d<\/p>\n
A majority of Fresno\u2019s inventory falls into Class B and C categories, which are buildings that are functional but dated. This mismatch, Stumpf said, is forcing landlords to determine whether to invest in upgrades or compete on price.<\/p>\n
\u201cLandlords are having to take a step back and assess, what do I do with this outdated office space?\u201d she said. \u201cDo I spend a lot of money to make it more functional, or do I stay competitive by offering my office space for well below market rent?\u201d<\/p>\n
Tenant behavior has also shifted a bit. Shorter lease terms and smaller footprints have become more common, mainly among smaller office users.<\/p>\n
\u201cOffice users have learned that they need to be highly flexible and adaptive to future economic changes,\u201d Stumpf said. \u201cWhat used to be a five-year lease, they\u2019re asking for a three-year lease or a two-year lease.\u201d<\/p>\n
James Bitter with Fortune Associates shared the same sentiments as Fena and Stumpf, saying that tenant improvement costs are shaping deal-making, while noting the limited medical space available.<\/p>\n
\u201cGeneral office space seems to have ticked up a bit, but tenant improvements continue to be the driver of all deals,\u201d Bitter said. \u201cThe medical office continues to be the prize with a vacancy near zero north of Shaw Avenue.\u201d<\/p>\n
Submarkets in north Fresno, northwest Fresno and Clovis continue to attract the most interest. This is in large part due to the close proximity to medical campuses and new professional service centers.<\/p>\n
\u201cThat\u2019s where you\u2019re going to see your highest return, that\u2019s where you get to the top rents, and that\u2019s where you\u2019re going to see the top demand,\u201d Stumpf said.<\/p>\n
Employment projection trends suggest that these trends are likely to continue over the next five years. According to Fresno County Economic Development Corporation\u2019s 2025-2030 forecast, health care support jobs are projected to grow by 5,214 jobs, a 12.8% increase, while health care practitioners and technical roles are expected to add 2,359 jobs. Educational instruction and library occupations are forecast to grow by 2,245 jobs.<\/p>\n
The expected employment increases could lead to demand for office space. Stumpf estimates Fresno could need between 2 million and 2.5 million square feet of office space over the next five years.<\/p>\n
\u201cDevelopers and landlords are going to have existing office inventory, they\u2019re going to have to reposition their office space so it meets the demands of health care, education and public-serving tenants,\u201d she said.<\/p>\n
Fena added that financing conditions have improved after a cautious start to 2025, with lenders reengaging as deal flow picked up as the year went on.<\/p>\n
\u201cThere\u2019s plenty of financing available out there, and lenders are calling us every week, anxious to lend money,\u201d he said. \u201cI wouldn\u2019t say it\u2019s great, but it\u2019s a hell of a lot better than it\u2019s been for the last couple years.\u201d<\/p>\n
Looking ahead, Stumpf said adaptive reuse and office-to-residential conversions is something to keep an eye on, mainly in Downtown Fresno.<\/p>\n
\u201cHow realistic is it going to be to convert those into high-density apartment residential?\u201d she said. \u201cWhat\u2019s your return on your investment? Is an underwriter going to agree to lend you money to make that conversion?\u201d<\/p>\n
For now, brokers say the market\u2019s stability that is anchored by health care, education and government tenants continues to set Fresno apart from larger, more volatile office markets.<\/p>\n
\u201cWe still have land available to build,\u201d Fena said. \u201cThat continues to attract a lot of businesses here.\u201d<\/p>\n
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