REAL ESTATE NEWS

Rich in amenities and top-quality product, the I-680 office corridor is the best-performing submarket in the East Bay, according to CBRE’s Q3 reports for that area.

Another overperformer in Northern California was Oakland’s industrial sector, which saw leasing activity surge 45.1% from the previous three months to 2.3 million square feet in Q3 from 1.6 million square feet in Q2 2025.

Andy Schmitt, senior vice president and managing director of CBRE’s office sector in the San Francisco East Bay, told GlobeSt.com that today’s tenants continue to focus on modern, high-quality buildings near major highways and BART, with easy access to restaurants and walkable amenities.

“While the overall market vacancy rate is approximately 23%, Class A properties adjacent to retail areas have much lower vacancies and higher rents,” Schmitt said.

“Walnut Creek’s downtown is especially attractive, drawing demand from San Francisco and Oakland due to its vibrant restaurant scene, retail options, and growing housing supply along the I-680 Corridor. The East Bay’s labor pool benefits from shorter reverse commutes, a significant factor influencing this current migration trend. This is the strongest demand we’ve seen in the I-680 Corridor in years, and we’re optimistic about the office market’s recovery.”

CBRE reported five leases totaling over 10,000 square feet were signed in Q3 in the I-680 Corridor office sector, boosting the total to 25 through the first three quarters of 2025.

The total 559,646 square feet of leasing activity marked the first time that two consecutive quarters exceeded 500,000 square feet since 2019 in the market.

Overall net absorption during Q3 was negative 198,627 square feet, up from Q2’s negative 169,666 square feet.

Market-wide, the rents per square foot per month (full-service growth) rose by two cents to $3.05.

Despite continued vacancy growth in the I-680 Corridor office market, the area is showing signs of resilience amid ongoing challenges, according to the report.

“Market sentiment remains optimistic,” Schmitt said. “This outlook is supported by firm underlying fundamentals and a growing sense that the market may be approaching a turning point.”

A reduction in office inventory, which has contracted by 3.4% year-over-year since Q3 2024, has provided a key stabilizing trend. The overall vacancy rate rose slightly to 23.1% from 22.3% in Q2. Availability increased from 26.3% to 27.4%.

Oakland Industrial Vacancy Jumps by 28 bps

Meanwhile, the Oakland/East Bay industrial market inventory comprises 127 million sq. ft. It saw its overall vacancy rate jump by 28 bps QoQ to 7.2%, and the overall availability rate spiked by 25 bps to 8.6%.

Year-over-year leasing activity leaped by 97.3%, up from 1.2 million square feet reported in Q3 2024.

Nonetheless, new vacancies outpaced new leases, resulting in 169,485 square feet of negative net absorption over 33 new availabilities under 30,000 square feet.

Bob Ferraro, executive vice president at CBRE, attributes the surge in leasing to several large signings in the third quarter totaling over 100,000 square feet, with three going passed 200,000 square feet. Most were renewals, but the few new transactions are companies within the market that are growing.

“The Oakland industrial market in 2025 is experiencing elevated vacancy and negative absorption, largely due to cooling e-commerce demand and tenant downsizing,” Doug Ressler, business manager, Yardi Matrix, told GlobeSt.com.

“Deal terms are softening, especially for older and Class B assets.”

Ressler said that small-bay urban assets are outperforming larger distribution centers, reflecting a shift in tenant preferences.

“Landlords are adapting with concessions and flexible terms to retain tenants,” he said. “Despite headwinds, investor interest and development activity remain steady, especially in advanced manufacturing and infill locations.”

San Leandro, Hayward and Fremont led leasing activity, driven by manufacturing and service occupants.

Source: GlobeSt/ALM