September 19, 2019
By Dennis Kaiser
San Francisco or San Jose tend to garner the lion’s share of attention when considering the Bay Area markets. Yet, the East Bay has emerged as a compelling alternative for many companies. TRI Commercial/CORFAC International’s Edward Del Beccaro shares insights into what’s driving the East Bay markets. Check out his responses to Connect Media’s questions about the East Bay’s growth, what’s attracting life sciences companies and the emergence of adaptive reuse in our latest 3 CRE Q&A.
Q: What’s driving growth in San Francisco’s East Bay, and which sub-markets are benefiting?
A: The Technology and Health sectors are the largest drivers of jobs, but we’re also seeing more FIRE (financial, insurance and real estate) sector companies migrating from San Francisco to reduce costs.
Most of the new development is multifamily. East Bay apartment rents have risen 10% over the past two years, compared to 20% in San Francisco, but rents have now reached a plateau and there are still many cranes on the skyline.
Office rents are still not at a level that can support new spec development in most of the East Bay, based on the high cost of construction, except for Oakland. There is new industrial space just completed in Hayward. There are also large amounts of office space in TriValley, Concord and Walnut Creek Shadelands sub-metros.
Q: What factors are making East Bay cities attractive to life sciences companies?
A: Life science companies are locating in East Bay to reduce occupancy costs and to attract employees who can’t afford to live in San Francisco. The workforce is here and there is access to venture capital. There are also world-class research partners located here. East Bay is home to UC Berkeley, one of the top bioengineering schools in the country, as well as three government labs that are mandated to share intellectual property. For instance, the Genome Center, which famously mapped the human genome and put the data in the public domain, is now doing the same with plants and animals.
Q: What trends are you seeing in adaptive re-use?
A: Empty retail big boxes are being absorbed or are in the process of being absorbed by medical facilities. Various hospitals are expanding rapidly by developing urgent care facilities throughout the region. This is coming at a time when a lot of retailers are hurting, so a lot of these new medical facilities are going into former Best Buys and other big-box retail spaces.
View original article on Connect California Commercial Real Estate News here.