The Downtown Oakland office market is changing. Where before we saw vacancies as high as 20-50%, depending upon the specific product and location, now we see compression to below 10%. For office, that represents full occupancy because a 10% or lower vacancy means an owner can choose to rent a space by simply lowering the price incrementally or by offering tenant improvements to draw a tenant way from a competitor.

As long as this office rental market is sustained in Oakland it makes a well-located office or office with retail purchase much less risky. That’s important because, while cash flows on multifamily have been under pressure for a long time cash flows from office have not: it remains possible to purchase a well located office building in Oakland with capitalization rate above 6% and cash-on-cash return above 10%. That is no longer possible in the multifamily market.

But the key question in relation to cash flow is risk. Call me to discuss Oakland Office opportunities.


Current 10-year fixed-rate loan rates allow for long term protection against interest rate changes while still allowing for high cash-on-cash return for properties (such as well-located Oakland office) with cap rates in the 6+ range.