Newmark Cornish & Carey today announced that after Oakland, California’s recent absorption of several San Francisco-based tenants, the Downtown Oakland market joins the other supply-constrained markets of San Francisco, the Peninsula and Silicon Valley with rapidly escalating rental rates and few large block availabilities. However, the I-680 Corridor markets continue to offer numerous large block occupancy opportunities at cost-effective rates. In fact, there are currently several opportunities to lease more than 200,000-square-foot blocks of space in the North I-680 Corridor and Tri-Valley markets. In contrast, there are no 200,000-square-foot blocks of available space in Downtown Oakland, and San Francisco will not deliver any 200,000-square-foot blocks of space until mid-2017.
“In past cycles, as San Francisco became supply-constrained and tenants realized the burden of steeply escalating rental rates, companies sought less expensive, comparable space in the East Bay,” said Tom Fehr, a Newmark Cornish & Carey executive vice president and regional manager. “Uber’s market moving purchase of the Sears Building in September highlighted the recent flight to the Downtown Oakland market, and now the I-680 Corridor markets are poised to absorb the migration.”
The I-680 Corridor lies to the east of the Downtown Oakland market and encompasses the North I-680 cities of Concord, Pleasant Hill, Walnut Creek and Lafayette as well as the Tri-Valley cities of Danville, San Ramon, Dublin, Pleasanton and Livermore.
In San Francisco, the Class A vacancy rate is only 4.5 percent with an average asking rental rate of $5.81-per-square-foot-per-month fully serviced. The third quarter ended with tenant demand at 6.3 million square feet with as many tenants having requirements greater than 50,000 square feet as there were contiguous blocks of space that size available in both existing and under-construction projects. The Downtown Oakland market closed the third quarter with a Class A vacancy rate of 6.91 percent and an average asking rental rate of $3.47-per-square-foot-per-month fully serviced, and up to $4-per-square-foot-per-month fully serviced for prime vacant space. In contrast, the North I-680 Corridor market third quarter Class A vacancy rate was 16 percent, with asking rental rates ranging from $1.90 to $4-per-square-foot-per-month fully serviced. The Tri-Valley market closed the third quarter with a Class A vacancy rate of 18.66 percent and an average asking rental rate of $2.75-per-square-foot-per-month fully serviced.
Large block availabilities exceeding 50,000 square feet located along the I-680 Corridor markets include:
• Swift Plaza - Newmark Cornish & Carey’s Breck Lutz and Alex Grell are marketing a full building opportunity consisting of approximately 185,000 square feet at 1755 Grant Street in Concord, California. At 1655 Grant Street, they are marketing approximately 98,000 square feet for lease.
• Corporate Plaza - Newmark Cornish & Carey’s Tom Fehr and Alex Grell are marketing 51,000 square feet for lease at 575 Lennon Lane in Walnut Creek, California.
• Bishop Ranch - Sunset Development Company, the owner of the eight million-square-foot business park, is nearing completion of major upgrades at 2600 Camino Ramon — the 1.86 million-square-foot building with multiple occupancy opportunities of 100,000 square feet and greater.
• East Bay Center - Located at One Sybase Drive, the world-class campus has two 203,000-square-foot buildings available for lease after SAP vacates the campus in early 2017.
• Rosewood Commons - Swift Real Estate Partners’ one million-square-foot campus has large block availabilities in two of the five buildings at the property.
• Centerpointe - Formerly Safeway’s Corporate Headquarters, the 201,000-square-foot single tenant building is currently available for lease at 5918 Stoneridge Mall Road.
• Sycamore Plaza - Newmark Cornish & Carey’s Jeff Morgenstern and Dan Watson are marketing 83,000 square feet of space at 6701 Koll Center Parkway in Bernal Corporate Park’s 99-acre, 1.2-million-square-foot master-planned business park.
“In addition to cost-effective occupancy opportunities for corporations, the Interstate 680 corridor offers employees affordable housing, highly-rated educational institutions, low crime rates and numerous regional parks and outdoor recreational areas - it is an incredible place to live,” continued Mr. Fehr. “I firmly believe history will repeat itself and the I-680 corridor will experience an influx of tenant migration soon.”
About Newmark Cornish & Carey
A dominant regional real estate force since 1935, Newmark Cornish & Carey has an expansive reach as part of Newmark Grubb Knight Frank, one of the world’s leading commercial real estate advisory firms. Regionally, Newmark Cornish & Carey has more than 280 agents in 13 strategically located offices throughout Northern California, creating a powerful platform from which to deliver superior services locally, while upholding its core values of integrity and knowledge. For further information, visit www.newmarkccarey.com.
About Newmark Grubb Knight Frank
Newmark Grubb Knight Frank is one of the world’s leading commercial real estate advisory firms. Together with London-based partner Knight Frank and independently-owned offices, NGKF’s 12,800 professionals operate from more than 370 offices in established and emerging property markets on six continents.
With roots dating back to 1929, NGKF’s strong foundation makes it one of the most trusted names in commercial real estate. NGKF’s full-service platform comprises BGC’s real estate services segment, offering commercial real estate tenants, landlords, investors and developers a wide range of services including leasing; capital markets services, including investment sales, debt placement, appraisal, and valuation services; commercial mortgage brokerage services; as well as corporate advisory services, consulting, project and development management, and property and corporate facilities management services. For further information, visit www.ngkf.com.
NGKF is a part of BGC Partners, Inc., a leading global brokerage company servicing the financial and real estate markets. BGC’s common stock trades on the NASDAQ Global Select Market under the ticker symbol (NASAQ: BGCP). BGC also has an outstanding bond issuance of Senior Notes due June 15, 2042, which trade on the New York Stock Exchange under the symbol (NYSE: BGCA). BGC Partners is led by Chairman and Chief Executive Officer Howard W. Lutnick. For more information, please visit www.bgcpartners.com.