Navigating Through Uncertainty: Downtown Oakland's Office Market Confronts Rising Vacancies Amid Economic Shifts
Downtown Oakland's office market is navigating a challenging phase, characterized by increasing vacancy rates and subdued leasing activity, as revealed by the latest CBRE report. The close of the fourth quarter of 2023 saw office vacancy rates in the city's central business district — which includes the Uptown, downtown, and Lake Merritt submarkets — rise to 30.2 percent, up from 29.7 percent in the previous quarter. Overall office availability also increased slightly, reflecting broader market pressures.
Despite these challenges, there were some leasing highlights, such as Tetra Tech's renewal of an 11,136 square-foot lease and Pyatok Architects' new lease for 11,122 square feet. However, the market experienced a significant net absorption downturn, with a negative figure of 188,200 square feet for the quarter, culminating in a year-to-date net absorption of negative 921,200 square feet.
Tenant demand has shifted towards smaller office spaces, indicating a trend towards downsizing. The departure of major tenants like WeWork has exacerbated vacancy rates, though neighboring Alameda showed resilience with a low vacancy rate and positive net absorption, driven by a diverse mix of industries.
While Oakland's office market struggles with these headwinds, it is performing slightly better than San Francisco, where vacancy rates have reached new heights. In response, Oakland landlords are adjusting asking rates to better match supply with demand, though investment sale activity remains cautious amid economic uncertainties.
A hopeful sign emerged with BART's planned purchase of the 2000 Broadway office building for conversion into its new administrative headquarters, marking one of the few investment sale activities. Meanwhile, construction and new project deliveries have halted, highlighted by Signature Development's sale of its planned office tower site to the East Bay Meditation Center, indicating a strategic shift in response to the current market dynamics.
TikTok's Bold Expansion: Doubling Down in Bellevue and Eyeing Silicon Valley for Strategic Growth
TikTok, under its parent company ByteDance, is making strategic moves to significantly expand its corporate real estate footprint in key U.S. tech hubs. The social media behemoth is finalizing a deal to lease six floors in Bellevue’s Lincoln Square North tower, which would expand its office space in the area to 242,000 square feet. This move comes as TikTok seeks tenant improvement permits to occupy floors 23 through 28, marking a notable increase from its current Bellevue presence.
The opportunity for expansion in Bellevue arose following Microsoft's vacating of prime office space, allowing TikTok to more than double its existing footprint in the region. Meanwhile, ByteDance is also advancing discussions to secure a substantial office presence in San Jose, eyeing a significant sublease at the Coleman Highline complex. This complex, previously associated with Roku, includes two large buildings that ByteDance is considering, potentially adding a considerable amount to its Silicon Valley operations.
This expansion strategy not only demonstrates ByteDance's ambition to cement its standing in the global tech landscape but also underscores the growing importance of Bellevue and Silicon Valley as central nodes in the tech ecosystem. Furthermore, TikTok's aggressive push into U.S. e-commerce, with plans to challenge giants like Amazon, is indicative of its transition from a mere social media platform to a formidable force in social commerce. With a notable hiring spree in the Seattle area, surpassing Amazon in local job openings, TikTok is positioning itself at the forefront of this evolving market trend. This strategic real estate and business expansion reflects TikTok’s broader ambitions to influence and lead in the technology and retail sectors.