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Market Report

Oakland Industrial

Second Half 2019

Industrial Deliveries Escalate Along 880 Corridor; R&D Facilities Trade With Increased Frequency

Annual delivery volume reaches a cyclical high, placing upward pressure on vacancy. A thriving local economy and rising wages increased online spending by Oakland-East Bay residents over the past two years, influencing tech firms, retailers and third-party logistics providers to occupy additional warehouse and distribution space. Heightened demand from tenants supported the absorption of more than 2 million square feet of floor plans during the 24-month span, holding metro vacancy in the low-3 to low-4 percent range. Tight conditions and strong demand allowed for robust rent growth, as the region’s average asking rate climbed nearly 30 percent during the stretch. Responding to the market’s strength, developers broke ground on a collection of speculative projects. Many of these developments come to fruition in 2019, equating to the delivery of approximately 2.9 million square feet of space. The 880 Corridor is home to most of these supply additions, with the cities of Fremont, Newark and San Leandro all welcoming sizable completions at existing industrial parks. This influx of new space, roughly half of which is available for lease, will elevate metro vacancy beyond 5 percent for the first time in four years as net absorption turns negative.

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