Live networking! (See photos

March Madness Mixer

BOMA members enjoyed in-person networking at a sportsthemed mixer at Sauced in Walnut Creek on March 9.

Above: Debbi Nakahara, Kay Chesterfield; Sherrie Martinez, CIM Group; Talmage Scoffield and Jesus Muela, Blueline Associates; and Yolanda Harris, Janico Building Services.

Top right: Seth Jones and Michelle Nash, Uptown Station/Newmark; Karissa Obeso, Cushman & Wakefield; and Juan Menendez, Metro Services.

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Above: Erik Carlson, Brian May, and Rick Bensi, all with Metro Services.

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Looking Forward (Continued from page 1)

There is growth in satellite offices in the East Bay, as well as life science activity in Pleasanton. Satellite offices were first driven by COVID, then companies and employees realized advantages and the lower costs of suburban locales. Long term Arnold predicts that: “Cities will come back. People are social animals and like to work in offices, where they are more productive.”

Industrial: Strong Demand and Absorption

Ferraro of CBRE reported a changing demand in the industrial sector in the East Bay. While the market was once dominated by warehousing, it is moving toward third-party logistics, e-commerce and life science. Amazon has a huge presence in the East Bay. New players such as life sciencerelated companies are expanding from the Peninsula and the South Bay and absorbing new product. Their rents drop when they come to the Easy Bay. There is also a big push, especially along the 880 corridor, for electric and autonomous vehicle companies.

The market is changing. Ferraro sees “a big future look for the East Bay as more tech-related and life science-related companies” move to the area.

The supply is scarce in the East Bay in the industrial sector. In 2022 there are 3-3.5 million square feet of product coming up, with another 2.2 million expected in 2022.

New product in the construction pipeline is mostly leased before or within 90 days of completion. “We will see rents increase dramatically,” he said. CBRE expects rents in the sector to jump 40% over the next four to five years in the Oakland MSA, as the demand continues to be reshaped. The trend line shows higher costs pushing higher values and higher rents.

Retail: It’s All About Location and Street Scenes

“Pedestrian-friendly neighborhoods are doing well,” noted Cho of Goldman. Walkable neighborhoods are faring better than the city centers. Smaller footprints are a trend, with less need for inventory storage due to e-commerce. Parking is essential, and outdoor restaurant seating is very desirable. For East Bay retail/restaurant street corridors, the data for 2021 “show an upswing in brick and mortar.”

There is also evidence of creativity in the rent structures, with pop-ups and short-term leases being negotiated. Who

is leasing in the retail sector? The following are strong: medical services (such as One Medical), local kitchens, plant shops (shown to generate lots of street traffic) and personal services such as salons. Also emerging is a sort of hybrid retail—click to brick e-commerce companies are opening stores as a part of the sales channel so that customers may have a touch-andfeel experience when shopping for items like bedding and clothes. Sustainability is a focus, as consumers demand transparency in packaging and energy use. Also, people are also buying more vintage goods. Malls are adapting and will continue to renovate and modernize for live/work/play. “Retail has its challenges, but will be resilient,” Cho predicted. Hattersley noted that we need retail to bring people back into the office and vibrancy to neighborhoods. Cho remarked that “landlords The growth in e-commerce is changing are more willing to do warm-shell the make-up of the industrial sector. amenities to bring (retail) tenants back.”

Life Science Sector Demand at New Heights

Transwestern’s Conte said that life science is “the hottest sector in real estate.” The demand in the Bay Area is higher than ever. Why? The Bay Area receives record-setting venture investment in biotech and healthcare, and there is a lot more NIH (National Institutes of Health) funding. The trend is “just in its infancy,” he noted. It will permeate many sectors. There is huge demand for real estate, and life science companies are moving to the East Bay. However, not every office building can be converted to life science use. These tenants need more power, higher ceilings, 24/7 buildings, sterility and special air handling and plumbing. In addition, loading areas must be equipped to handle temperaturesensitive deliveries. Yet the “biggest hurdle is bureaucratic,” Conte said. Zoning is antiquated, and some possible “good clusters” are not zoned for this use. Companies are “land-grabbing” now, and Conte is bullish on the life science sector. The challenge is finding space that is functional. Some cities are more welcoming, including of Emeryville and Fremont. Berkeley is less so. Vacaville is expanding in the sector and is attractive due to its proximity to UC Davis and UC Berkeley. n