Between 70 and 80 percent of the recent demand for office space across the Bay Area has been driven by tech companies, according to Cassidy Turley.

In San Francisco, the demand for office space is at an all-time high and office rents have increased 15 percent over the past year and nearly doubled since the first quarter of 2010, a spike which has started to drive firms concerned about profitability, versus simply growth, out of the city and following in the footsteps of non-profits for which San Francisco has become too expensive from which to operate.

At the same time, office rents in Oakland have only increased 1 percent over the past year and are currently running at half the cost of being in San Francisco.  And with a vacancy rate which is twice as high (14 percent), Oakland is poised to be one of the biggest beneficiaries of the tech clustering around San Francisco, especially considering the number of tech company employees and other professionals who are increasingly calling the East Bay home.

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Comments from “Plugged-In” Readers

  1. Posted by David

    When tech companies start opening shop in Oakland, their employees are going to want to live closer to work, and will be more likely to relocate to Oakland. Good time to buy real estate in up-and-coming parts of Oakland.

    • Posted by Zig

      That ship sailed a few years ago I’d say

      • Posted by Some Guy

        Well, err, maybe not. By now (Oct 2018) it has probably finally sailed, with rehabbed 3 bedroom SFRs going for $550-750K even in pretty crappy areas like upper Fruitvale.

  2. Posted by eddy

    Never thought the Brooklynization of Oakland would get legs but would be great to see it happen.

  3. Posted by Craig

    Will be interesting to watch how this all plays out as office space becomes increasingly rare in SF. So far it seems that companies have mostly been following the employees (to SF) at whatever cost necessary. If companies start going to Oakland, will the employees follow them there? Or will they just find a company that isn’t a perceived cheapskate and stay in SF?

  4. Posted by Frank C.

    Note that we do not see any new office projects in Oakland breaking ground right now. Developers have said (SF Business Times) that residential projects are not penciling out. So seems like the same is true for office.

    If the current demand in Oakland is not generating shovels in the ground, then lending is obviously a huge issue right now for developers and this crisis. Gotta fix this.

  5. Posted by rabbits

    My company extended its lease a few months back in the nicest office building in downtown Oakland for $29/sqft. Comparable space in SF is $60+.

  6. Posted by curmudgeon

    I think that the re-development of the Sears building will show whether this plays out or not. That will most likely be the first large scale development of “new” office space in Oakland, and it is in exactly the right spot. Hope it does. But a major tech correction could easily stop this…there is the perception that there is “no” space in San Francisco (much as there was in 1999/2000). But with the apparent warehousing of space for future needs by technology firm in SF in existing and new buildings (Salesforce, LinkedIn, many others I’m sure), any correction could release lots and lots of space to the sublease market.

  7. Posted by Solo

    Most, if not all , large Tech Companies in SF have already signed their ten plus years leases. The down cycle will hit in eight years and this smallish tech companies that moved to Oakland will rush back to SF because the rents will be half. Same thing happend in 1998-2001.

  8. Posted by curmudgeon

    ^ to Sausalito_res’ last point…it’s unbelievable that Oakland real estate (new development) hasn’t heated up for either res or office yet, despite years of boom in SF. I blame it on political leadership (but financing is also undoubtedly a major issue). At this point in the last boom residential development in Oakland was going gangbusters…much thanks to Jerry Brown greasing the rails as the last “strong mayor” of Oakland. Meanwhile, residential real estate prices are booming, as are renovations. But almost NOTHING new is coming out of the ground.

    • Posted by Spencer

      ive had several friends moving to oakland hills and rockridge. These are nicer areas, but there are still a lot of break-in. My friend was recently held up at gunpoint in one of the nicest area. To me, that’s not worth getting a bigger place at a better price.

      • Posted by Brian M

        That does happen in the Emerald City, too though. Tourists killed on Russian Hill, for gott’s sake!

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