Tech Demand Is Returning to Oakland

Downtown Oakland is beginning to make its office recovery. Social media company Twitter has signed a 66,000-square-foot lease for four full floors at 1330 Broadway in Downtown Oakland, California. The lease marks Twitters expansion into Oakland and illustrates the strong demand for office space from tech companies.

It isn’t surprising that tech companies would lead the office recovery in Oakland. During the pandemic, technology companies drove leasing activity across the US. A report earlier this year from CBRE shows that tech companies accounted for 17% of all US office leasing last year by square footage, as opposed to 21% the previous year. However, tech company leasing was still down 48% over 2019 levels to 26 million square feet. Total office leasing in the U.S. declined by 36% year-over-year.

Oakland didn’t make the list of the top 10 markets for office leasing last year, although neighboring San Francisco did. Seattle was the most active market for office leasing among technology companies, according to the report, followed by Manhattan and Washington DC.

Cheaper rents in San Francisco actually hurt Oakland and the rest of the East Bay during the pandemic. Office users were no longer flocking to the market for affordability, and as a result, class-A office demand plummeted. In fact, research from Marcus & Millichap predicts that class-A office will likely be slower to recover than class-B and class-C office space as a result. Prior to the pandemic, office prices in the East Bay and Oakland were 70% less than the surrounding major metros, but the increased availability in those markets will likely close that pricing gap.

Still, a substantial office lease from a major tech tenant like Twitter spells good news for the submarket’s recovery and for class-A demand. “Twitter’s expansion into Oakland demonstrates that major employers are still drawn to our city’s unique cultural amenities and creative energy,” Oakland Mayor Libby Schaaf said in a statement about the lease transaction.

TMG Partners and KKR own 1330 Broadway and recently completed renovating the property. The building now features a new main lobby and building entrance, new common area finishes, major elevator and building systems’ modernization, refurbished conference facilities, enhanced bike parking and commuter showers. John Dolby of Cushman and Wakefield represented TMG and KKR, while Christina Clark and Matt Lehman of Cresa represented Twitter.