Q1 2025 Market Report

Leasing Activity:

Following a robust Q4, leasing activity in the East Bay industrial market decelerated in Q1 2025, with approximately 2.14 million square feet leased across 18 transactions. Notable deals included:

• FedEx Ground leasing 147,500 square feet at Prologis’ 85th Avenue facility in Oakland.
• Yatai Fabrication securing 95,092 square feet on Loveridge Ridge in Pittsburg.

Renewals constituted a significant portion of the activity, accounting for 43% of the volume. Key renewals featured:

• Omni Logistics renewing 191,668 square feet on Dowe Avenue in Union City.
• Benjamin Moore renewing 141,844 square feet on Pardee Street in Oakland.

Absorption and Occupancy:

Despite some large move-ins, net absorption was negative for the quarter, totaling -224,738 square feet. Significant occupancy changes included: 

• Imperial Dade occupying 286,100 square feet on Las Positas Road in Livermore.
• Chetak leasing 126,456 square feet on Whipple Road in Union City; however, 40,055 square feet remain unoccupied and available for sublease.

Multiple smaller move-outs, ranging from 15,000 to 40,000 square feet, contributed to the negative absorption, with Wayfair vacating an 82,300-square-foot space on Williams Street in San Leandro being the largest.

Rental Rates and Concessions:

Average asking rents in the East Bay remained relatively stable year-over-year, with a slight decrease. Key rental metrics:

• Average asking rent: $1.68 per square foot NNN.
• Average starting rent (strike rate): $1.14 per square foot NNN, reflecting a 7%-10% discount from asking rents.

Landlords continued to offer concessions to attract tenants, including an average of five months of free rent and tenant improvement allowances ranging from $1.00 to $2.00 per square foot.

Market Fundamentals:

• Total vacancy rate: 7.3%. 
• Total availability rate: 9.4%. 
• Under construction: 1.42 million square feet, with 59.4% pre-leased.
• Year-to-date deliveries: 950,268 square feet. 

Outlook:

Economic uncertainty and proposed tariffs on imported goods have introduced hesitation among tenants, leading to a preference for short-term renewals over long-term commitments. First-year rents are expected to experience slight declines through the first half of the year as the market adjusts to these uncertainties. Landlords may continue to offer competitive concessions to retain and attract tenants during this period.

• • The higher rate of renewals and fewer large move-ins pushed absorption into the negative.

• • Average asking rents have been relatively stable through year-over-year, however, the ‘strike rate’ of executed leases are below asking, with tenant concessions leveling off.

• • Activity was slowed last year due to economic uncertainty and the election but now tenants are facing hesitation in making long term decisions with new tariffs looming.