FREMONT, CA—East Bay industrial landlords continued to benefit from demand during the fourth quarter of 2017, while developers and institutional buyers raced to provide high-quality distribution spaces to capitalize on the sizzling market. Despite several givebacks during the past three months, the vacancy rate was 3.5% market-wide at year's end, and virtually all submarkets were well below 5%, according to a fourth-quarter report by Kidder Mathews.

An increase in availabilities, driven in part by cycle-high construction levels, allowed for 1.6 million square feet of fourth-quarter leasing activity, with more likely to come in the first half of 2018. More than 1.6 million square feet of future industrial space was being built in the inner East Bay at the end of 2017, but the broad base of tenants in the market should keep rental rates firm against the increase in supply, says the report.

State-of-the-art spaces have realized a 20% jump in rents during the past 12 months, attracting investors from around the country to purchase, renovate and reposition industrial assets along Interstate 880, GlobeSt.com learns. Case in point is the latest acquisition of buildings within the Bayside Business Park.