No vacancy: Office space in Oakland is tighter than ever
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If you're looking for premium office space in Oakland, you might want to look somewhere else.
The perennially tight office market there couldn't be much tighter, registering a zero vacancy rate for top Class A space in the last quarter, according to two real estate reports.
"In 20 years of doing commercial real estate, I don't think I've seen a zero vacancy rate in a significant market comparable to Oakland," said Aaron D. Stauber, president of New York-based Rugby Realty, which has extensive property holdings in Pittsburgh.
Oakland's vacancy rate is even more amazing, Mr. Stauber said, when compared with vacancy rates throughout the country and in some of the biggest cities that have been soaring as a result of the recession.
"In the context of what's happening in the rest of the country and the economy, it's mind-boggling," he said.
Fourth-quarter 2009 reports by the CoStar Group, a commercial real estate data firm, and CB Richard Ellis listed Oakland's Class A vacancy rate at zero. Another real estate firm, Grubb & Ellis, reported it at 2.8 percent, with all but 21,687 of 779,352 square feet of class A space taken. The vacancy rate for Class A space in Midtown Manhattan, by contrast, was 14.7 percent, according to one report.
"Zero is almost impossible to achieve, frankly. It's rare or an anomaly. You always have someone moving in or moving out. Traditionally, 96 to 97 percent is seen as 100 percent occupied," said Bill Hunt, president of the Elmhurst Group, which owns one fully occupied office building in Oakland.
Even after adding other classes of office space into the equation, Oakland still commands the lowest vacancy rate in the region, at 1.8 percent to 7.1 percent, depending on the report.
Factors filling Oakland nearly to the brim include the ever-growing demand for space by universities and medical institutions and the scarcity of private land available for new office development.
The high cost of building underground parking, a virtual must in Oakland, is a big factor in discouraging speculative office construction, said Jason Stewart, Grubb & Ellis vice president. He estimated that the cost of building one underground parking space could run $35,000 to $45,000.
The high demand for office space and the short supply have been a boon for Oakland landlords and merchants - as well as the Pittsburgh Technology Center and Downtown landlords, both of which offer an alternative to businesses, universities and others who can't find the space they want in Oakland.
First Published February 25, 2010 12:00 am
