Demand for office and R&D space has increased in the Bay Area as hybrid work habits stabilize and the life sciences sector continues to strengthen, according to a new report from brokerage CBRE. The number of tenants looking for space in the region increased by 14% in May, with Auckland seeing the largest increase.
Prospective tenants rose to 341 in May from 299 in the first quarter. Auckland saw the biggest increase at 44 per cent, with the Peninsula in second place at 26 per cent. San Francisco and Silicon Valley saw similar increases in interest at 14%, while the I-680 corridor from Walnut Creek to Fremont saw a 20% decline. Technology was the leading industry looking for space, accounting for 30% of potential tenants, followed by life sciences (19%) and professional/business services (18%).
Office tenants pulled back in the first quarter in response to macroeconomic headwinds, including rising inflation, companies cutting costs, layoffs and rising interest rates, according to CBRE research. With more startups and AI companies looking to set up or grow their offices, and mixed work policies generally stable, demand started to pick up “albeit marginally” early in the second quarter.
interest drops along I-680 corridor It is in stark contrast to the fiery start at the beginning of the year. The report found that tenants sought 2 million square feet of office space along the I-680 corridor in the first quarter, with 20 percent, or one-fifth, of active tenants coming from the outside market.
“These tenants are also operating in a cost-conscious environment, for example, Walnut Creek has lower office rents than San Francisco,” CBRE’s Andy Schmidt said of last quarter’s growth.
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Notable leasing in the area in the first quarter included Regus taking three floors in the city center Oakland Forum Tower.Additionally, the Emeryville-based biopharmaceutical company Viviani Radius Bay Harbor has leased a building on its 700,000-square-foot life sciences campus in Alameda.
