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\n Bisnow\/Max Stein\n <\/p>\n
\n Boldyn Network’s Rachel Fenton, Playbook’s Colleen Werner, Jamestown’s Alex Schwiebert and Salesforce’s Josh Glynn\n <\/p>\n
Oakland<\/a>\u2019s office market is\u00a0still trying to find its footing as San Francisco shows early signs of life, with East Bay<\/a> landlords facing rising vacancy, stalled demand and a growing urgency to reposition space in hopes of catching any future spillover from the region\u2019s artificial intelligence\u2011driven leasing surge.<\/p>\n Oakland\u2019s fundamentals underscore the challenge: Vacancy climbed to 27.4% in Q1 after another quarter of negative absorption, rents in the central business district have fallen nearly 28% from their peak, and the tenant pipeline that once reliably followed San Francisco\u2019s cycles has yet to materialize.\u00a0<\/p>\n Against that backdrop, East Bay landlords say the only viable strategy is to get ahead of demand that isn\u2019t here yet \u2014 investing selectively in spec suites, amenities and ready\u2011to\u2011pull permits so they can move fast when tenants finally start looking across the Bay.<\/p>\n \u201cYou don’t want to do it upfront and sit on it for a couple of years, but you get permits ready to go and can tee yourself up to be ready to move when the market comes,\u201d The Sobrato Organization<\/a> Senior Vice President of Real Estate and Development Robert Tersini said at the Bisnow Bay Area Office<\/a> Summit on May 14 at the Grand Hyatt San Francisco.<\/p>\n Oakland landlords can be ready to meet the market when it comes by repositioning a few floors of their buildings as proof of concept when tenants do come looking for space in the East Bay, Strada Investment Group<\/a> Senior Vice President Katie Hofstetter said.<\/p>\n \n Bisnow\/Max Stein\n <\/p>\n \n Lubin Olson’s Cherie Song, Studios Architecture’s Marc Pfenninger, The Sobrato Organization’s Robert Tersini, Revel Architecture & Design’s Scott Clement, Strada Investment Group’s Kathryn Hofstetter and KR Johnston Construction’s Kara Johnston\n <\/p>\n \u201cOne of the best leasing tools we’ve had is tenants with nice space,\u201d Hofstetter said. \u201cHaving space that shows really well is worth the investment.\u201d<\/p>\n The East Bay city had a Q1 vacancy rate below that of neighboring San Francisco, at 27.4%, but it was up 3% year-over-year due to negative net absorption of 110K SF in the quarter, according to Cushman & Wakefield<\/a>.\u00a0<\/p>\n Oakland landlords with dark office space need to be strategic with their capital allocation on build-out spaces or when creating amenities that might boost their building\u2019s profile, Tersini said.<\/p>\n Asking rates in Oakland\u2019s central business district in Q1 were $3.92 per SF, down nearly 28% from their all-time high. Companies that have planted their flag in Oakland\u2019s central business district include Kaiser Permanente<\/a>, Pandora<\/a>, Block and Clorox.<\/p>\n Across the bay, San Francisco\u2019s office market is improving, which is likely to eventually bleed over into Oakland as space fills and companies seek affordability.<\/p>\n Although office vacancy in San Francisco at the end of Q1 was still exceptionally high, at 31.6%, it improved from 34.4% the same quarter a year earlier, according to Cushman & Wakefield<\/a>. New office leases accounted for 3.7M SF in the quarter, the highest level of office leasing since Q2 2018.<\/p>\n \n Bisnow\/Max Stein\n <\/p>\n \n Allen Matkins’ Tony Natsis, The Meridian Group’s Alex Cheek, BXP’s Christine Yuen, The Swig Cos.’ Connor Kidd, Kilroy Realty’s Mike Schmidt and NAI Global’s Arthur Milston\n <\/p>\n AI companies want space quickly, and many are willing to eschew traditional office planning and tenant improvement processes to get their employees coding as fast as possible, said Mike Schmidt, senior vice president of Northern California leasing for Kilroy Realty<\/a>.<\/p>\n Landlords with move-in-ready properties will capture the larger share of AI and technology tenants during the upswing in office leasing, Schmidt said.<\/p>\n \u201cThese smaller tenants, AI tenants especially, are so focused on speed to occupancy and getting into the space immediately,\u201d Schmidt said. \u201cHaving space occupancy ready has been key. They want to move in right upon execution.\u201d<\/p>\n Kilroy\u2019s Bay Area portfolio spans more than 11M SF, including 3.3M SF of Class-A office space in downtown San Francisco<\/a>. At the company\u2019s 201 Third St., a 12-story, 336K SF building, building out smaller suites for AI tenants led to occupancy rising from 25% to more than 90%, Schmidt said.<\/p>\n Landlords need to reinvest speculative capital into their properties to increase the availability of move-in-ready suites, Hofstetter said. It is an investment strategy Strada deployed at 201 Spear St., a 255K SF, 18-story building in the East Cut that Strada acquired in 2024<\/a>.\u00a0<\/p>\n \u201cAI tenants, especially brand-new AI tenants, need space tomorrow, so having something ready to go is super important,\u201d Hofstetter said.<\/p>\n","protected":false},"excerpt":{"rendered":"Bisnow\/Max Stein Boldyn Network’s Rachel Fenton, Playbook’s Colleen Werner, Jamestown’s Alex Schwiebert and Salesforce’s Josh Glynn Oakland\u2019s office…\n","protected":false},"author":2,"featured_media":357157,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[21045,145425,145424,101,103,102,104,106,105,145423,68561,145422],"class_list":["post-357156","post","type-post","status-publish","format-standard","has-post-thumbnail","category-san-francisco","tag-kilroy-realty","tag-oakland-office-market","tag-oakland-office-vacancy","tag-san-francisco","tag-san-francisco-headlines","tag-san-francisco-news","tag-sf","tag-sf-headlines","tag-sf-news","tag-sobrato-organization","tag-strada-investment-group","tag-the-sobrato-organization"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/357156","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=357156"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/357156\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/357157"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=357156"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=357156"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=357156"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<\/p>\n<\/p>\n