I-80/I-880 Corridor Well Positioned for Recovery
In the second quarter, the Interstate 880 (I-880) industrial market saw marginal increases in vacancy and downward pressure on lease rates and sale prices. As an urban infill market, the I-880 corridor market has performed significantly better than the national average, with overall vacancy at 9.4 percent versus double digit vacancy nationwide. On a year over year basis, vacancy is up marginally (from 8.5 percent in the second quarter of 2010). Asking rates are down across the board to $0.43 from $0.49 Triple Net (NNN) per square foot per month (psf/mo) a year ago. We anticipate the sharp increases in market vacancy rate witnessed over the past several quarters will likely flatten over the remainder of 2010 with the possibility of positive rent growth in 2011.

As a result of the NUMMI factory closure and the ensuing domino effect on the shadow industry that supplied the plant over the past decade, many previously unanticipated vacancies have saturated the surrounding industrial market. Tesla Motors' recent acquisition of the former NUMMI factory and announcement of plans to build the Model S sedan and future Tesla vehicles at the Fremont factory will hopefully reverse this trend. The anticipation is that many companies that previously supplied Toyota's NUMMI plant will modify their business models and product lines in an effort to cater to Tesla and their future needs.

 Click here for the full report.

Positive Change in the Oakland Metropolitan Market
The one constant in every market is change. The Oakland Metropolitan office market experienced a great deal of change during the first half of the year, and we expect much of it will be good for the region. The Watergate Office complex in Emeryville, which had been in receivership since early 2009, was taken back by US Bank who hired TMG Partners to manage the three building, class A office complex that totals over 800,000 square feet. This was good news for the leasing market as it provided some clarity to the marketplace. It is rumored that US Bank has signed or is about to sign over 140,000 square feet of leases in the complex.

CBREI acquired over 1.5 million square feet of office and retail space at Oakland City Center from the Shorenstein Company on the last day of the quarter. This might be the largest real estate transaction for the year in the East Bay, and it was certainly a surprise to the market. Shorenstein purchased City Center in 1987 and subsequently built 555 12th Street, one of the premier office buildings in the region. Shorenstein had started construction on another office tower in 2008 but stopped due to the meltdown in the financial services market. Shorenstein retained possession of that development, but there were few in the area that thought they would ever sell their primary interest in City Center.

 Click here for the full report.