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Oakland - East Bay

Apartment
New supply is rolling into the 150,000-unit Oakland-East Bay apartment market, but the market is still tight and expensive. Reis reports 710 market-rate units have completed construction thus far in 2017. Net absorption totaled 560 units through April, however, and the vacancy rate was still low at just 3.2% that month, down 10 basis points since year-end. Rents spiked by an average of 10.5% asking and 10.6% effective for each of the three years from 2013 to 2015, but the pace of gains has since slowed to around 4.0% per year—still faster than household average income. In the first quarter of 2017, the average asking rent increased 0.8% to $2,134 per month, with the average effective rent up 1.0% to $2,055 per month. In April, overall rents increased by 0.3% asking and 0.1% effective.
Industrial
The 126.7-million-square-foot Oakland-East Bay warehouse/distribution market got off to a slow start in 2017, with no new space added and just 111,000 square feet of net absorption through April. The 2016 totals had been 1.6 million square feet added and 2.4 million absorbed. The vacancy rate is down 30 basis points year-to-date to 8.2%. The average asking rent increased 0.9% during the first quarter to $5.60 psf, with the average effective rent up 1.0% to $5.08 psf. The April gains were 0.4% and 0.6%, respectively. The 25.2-million-square-foot Flex/R&D market remains quieter here, with 41,000 square feet of negative net absorption for 2017 through April. The vacancy rate was 12.2% that month, up 20 basis points year-to-date. The average asking rent was up 1.0% during the first quarter to $9.69 psf, with the average effective rent up 1.1% to $8.52 psf. The April increases were 0.3% asking and 0.4% effective.
Office
The 52.5-million-square-foot Oakland general purpose, multi-tenant office market had a sudden reversal in early 2017, with 371,000 square feet of negative net absorption through April. This followed the plus 1 million square feet of 2016. The April 2017 vacancy rate of 14.3% was up 70 basis points year-to-date. In 2015 and 2016, the average asking rent increased by an average of 7.8% per year with the average effective rent up 8.2%, but rent gains have slowed in early 2017. In the first quarter, the average asking rent increased 0.9% to $31.87 psf, and the average effective rent rose 0.7% to $25.06 psf. A gain of 0.1% by both measures followed in April.
Retail
The 28.3-million-square-foot Oakland-East Bay community-neighborhood shopping center market was static in early 2017, but with solid rent gains. Net absorption was 27,000 square feet through April and no new space was added, so the vacancy rate ticked down 10 basis points year-to-date to 6.5% that month. Both the average asking rent and the average effective rent increased 1.1% during the first quarter and 0.3% in April to $30.06 psf and $26.89 psf, respectively. These increases are large compared with the 2016 gains of just 1.0% and 1.1%, respectively, for the entire year.

Source: Data provided by Reis, inc.

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