Increased leasing for Class B offices contributed to an increase in East Bay asking rents during the fourth quarter, according to a report by CBRE.
Overall, asking rents only grew slightly from $4.50 per square foot to $4.52 quarter-over-quarter. However, asking rents for Class A offices fell from $5.03 cents per square foot to $4.98 cents. Meanwhile, asking rents for Class B offices increased from $4 in the third quarter to $4.16 in the fourth.
The increase for Class B asking rents is because smaller businesses are starting to return to the office.
“The flight-to-quality phenomenon we saw throughout 2022 continued into the fourth quarter. But we also saw small businesses and professional services that were more budget conscious commit to return-to-office plans, which increased leasing activity in the cost competitive buildings in the market,” CBRE’s Scott Greenwood said.
Greenwood has seen the trend continue into the first quarter of 2023.
“Although it is a small sample set, that trend seems to be accelerating as of the new year. We are very active with tours and tour requests from that size and segment,” he said.
Oakland’s central business district had the largest asking rents for office at $5 per square foot in the fourth quarter. Class A fetched $5.30, while Class B came in at $4.70.
In Emeryville, the rebound for Class B space was even more apparent. The average asking rent for Class B was reported at $4.70, a large increase from the $2.99 cents Class B offices were fetching the previous quarter. By comparison, $4.76 was the going rate for Class A in the fourth quarter.
The largest leases in the fourth quarter were in the life science sector at 62 percent, with the business services coming in second at 19 percent. All other industries accounted for less than 10 percent each in leasing activity.
“Life science continues to be the most active industry in the market in terms of both office and lab space,” the report said.
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