4th Quarter 2008 – East Bay Office Market Report

4Q08 East Bay Office Market Report

The 4th quarter of 2008 proved to be turning point in the market. Little change has been seen in vacancy and rental rates over the past 8 quarters. In the 4th quarter more than 442,000 square feet of office space has become available. 200,000 square feet of this in the Class A Oakland market alone. A major contributor is APL at 1111 Broadway. In December the company announced it will be departing Oakland and leaving behind a sublease of approximately 160,000 square feet. Emeryville has also seen a jump in vacancy due mostly in part to a surge in subleases. 70,000 square feet of space became available at 6401 Hollis, after Leapfrog reported financial losses. Bishop, Barry, Howe, Haney, & Ryder have also announced a full floor sublease available at 2000 Powell Street in Emeryville.

It is a tenant’s market. With a bucket of subleases available in Class A office product around the East Bay, terms have become negotiable and flexible. The magnitude of the current market conditions has forced previously unyielding landlords to sign leases on flexible terms in order to compete.