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OAKLAND, CA-Colliers International is painting a rosy picture for the Oakland office market in its recently released third quarter report. Demand is far outpacing supply, pushing rental rates above $50 per sf, while vacancy rates have plummeted – from 8.4% at the end of 1999 to 2.6% at the end of the third quarter, ensuring that the Oakland boom will continue as a force to be reckoned with in the Bay Area market.

Over one million sf of class A space was under construction in the Oakland metro area at the end of the third quarter, but nearly half of that space is pre-leased. And with many of the delivery dates more than a year away, Colliers is predicting the market will remain tight in the coming months. Although leasing activity has slowed, is has been due largely to a lack of available space.

Additionally, the report points to continued strength in the East Bay industrial market, particularly along the 80/880 corridor. Strong leasing activity during this quarter has kept the vacancy rate for R&D space under 3%. The report predicts that the coming months will see an increase in development in Oakland and San Leandro, as developers capitalize on the tight markets. Projects already in the ground include the 469,000-sf 555 City Center, the 328,000-sf Watergate IV in Emeryville and the Hollis Business Center, which will bring 220,00 sf online in Emeryville by January 2001.

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