Economy: Unsteady
The East Bay, consisting of Alameda and Contra Costa counties, recorded a gain of 3,000 jobs year-over-year (YOY), lowering the unemployment rate by 40 basis points (bps) to 4.4%. Despite overall gains, the Bay Area has experienced widespread layoffs within the technology industry, a sector that has been a driving force behind occupancy growth in the region. A soft job market in tech, among other office occupying industries, has continued to drag on employment through the third quarter of 2026. While nearby San Francisco has experienced an influx of leasing activity from AI companies, or those servicing them, that demand has yet to spill over to the East Bay office market in a meaningful way.
Supply: Rightsizing
Vacancy in the Tri Valley, consisting of Dublin, San Ramon, Pleasanton and Livermore, closed the third quarter at 21.2%, level with the previous quarter and down 20 bps YOY. The third quarter recorded 5,067 square feet (sf) of positive net absorption, the fourth of the last five quarters to post a gain in occupancy. Pleasanton was the driving force behind positive net absorption, recording 94,418 sf on its own, erasing nearly all of the negative absorption from the prior quarter and bringing the vacancy down to 20.6%. For the second consecutive quarter, San Ramon saw the most negative net absorption with -57,366 sf, as vacancy rose to 29.8%. Livermore, with its limited office inventory and tight R&D market, remains the submarket with the lowest overall vacancy, while Dublin retains the lowest pure office vacancy rate. There has been a consistent decline in smaller available spaces as both the group of spaces below 5,000 sf and 5,000-10,000 sf have declined YOY. Large block spaces, which have seen significant challenges coming out of the pandemic, finally saw some relief, down 3.9% YOY. The only size range to record a gain in available spaces from the previous quarter and YOY was 10,000-20,000 sf. There has been a recent push to demolish older, struggling office product in favor of residential redevelopment, a move that should concentrate demand on remaining inventory. This has been most prevalent in San Ramon, where over one million sf has already been removed from the inventory. With older vintage inventory being removed, employers will increasingly gravitate toward high-quality and well-amenitized buildings. Leasing activity demonstrates this trend as seven of the nine largest leases this quarter went to Class A buildings.
Demand: Rebounds
The third quarter recorded 378,425 sf of leasing activity, over double that of the prior quarter and more than the trailing two-year average of 326,225 sf per quarter. Pleasanton led all submarkets in leasing for the third straight quarter, bringing the submarket to 500,231 sf year-to-date (YTD).
This equates to 54% of all leasing in the Tri Valley, while Pleasanton makes up 44% of the total inventory. Pleasanton accounted for three of the four largest leases of the quarter. The largest lease of the quarter, and 2026 thus far, was at 6220 Stoneridge Mall Road, where Blackhawk Networks renewed its lease on 60,560 sf. This represents a downsize of 88,342 sf, but their recommitment to the market is a positive sign as prior to their renewal, the entire building was listed for sublease. The largest new lease of the quarter was signed by 1AU Technologies, which took 42,620 sf at 4696-4698 Willow Road in Pleasanton. There were 10 leases over 10,000 sf this quarter, as tenant demand showed new signs of resilience. While most of these were renewals, the recommitment of large tenants is still a positive sign for the market.
Pricing: Resilient
The overall asking rate for the East Bay Pleasanton market closed the third quarter at $2.97 per square foot (psf) on a monthly full-service basis, a decrease of $0.01 psf from the prior quarter but up $0.04 psf YOY. The primary source of this downward pressure on rental rates came from R&D product, which fell by $0.24 psf from the previous quarter. Class B office saw a modest decrease from the previous quarter of $0.02 psf, however remained up $0.01 psf YOY, while Class A office was unchanged QOQ and is still up by $0.03 psf YOY. Dublin continued to experience the greatest rental rate appreciation within the market, up 4.1% YOY to $2.92 psf. Pleasanton has also recorded growth in recent quarters, up 1.9% YOY to $2.97 psf, while both San Ramon and Livermore have seen asking rates decrease slightly. While other markets have experienced falling rental rates as a reaction to rising vacancy, pricing has remained resilient in the East Bay Pleasanton market. Since the Tri Valley already offers discounted rents compared to nearby markets, there is less pressure for rents to fall. While the inventory continues to downsize, with lower quality inventory being phased out in favor of residential redevelopment, rates are likely to remain stable and may even see further upward pressure.
Sales: Activity Slows
Sales activity in the Tri Valley slowed drastically in the third quarter, following a surge in activity in the first half of 2026. The only significant sale in the third quarter was 2340 Santa Rita Road, an 11,150-sf office building located in Pleasanton. Anchor Education Inc. purchased the building for $4.0 million or $359 psf. This represents the largest psf price for a building larger than 10,000 sf in over a year, a sign that owner-user demand remains strong. With vacancy elevated and a substantial base of functionally obsolete product, redevelopment sales may continue to be a significant driver of sales activity.
