Empowering Landlords and Businesses Across Silicon Valley

The East Bay Tri-Valley industrial market — which includes Livermore, Dublin, and Pleasanton — closed out 2024 with a relatively stable performance. While leasing and sales activity was flat compared to earlier quarters, the market continues to show resilience, particularly for quality, well-located industrial properties.

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Vacancy & Absorption Trends

• Vacancy ticked up slightly to 10.0%, compared to 9.7% in Q32024
• Over the past 12 months, the market recorded negative net absorption of 214,749 SF, reflecting slower tenant demand overall.
• Landlords continue to offer more concessions (such as free rent or tenant improvement allowances) to attract and retain tenants.

Owner takeaway: While vacancy is higher than the pre-pandemic years, demand for functional, modern industrial buildings remains healthy. Owners of Class B and C assets may need to be more aggressive in deal-making.

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Rental Rates

• Average NNN asking rents held steady at $22.48/SF, down slightly from earlier in the year but essentially flat across 2024
• Rents remain close to historic highs, demonstrating that tenants are still willing to pay a premium for the right space.

Owner takeaway: Expect rents to remain stable, but build flexibility into negotiations. Stronger rent growth will likely return once absorption improves.

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Investment Sales & Cap Rates

• Sale pricing held at $316/SF this quarter, very close to the Q3 average
• Cap rates continued to hover at 6.1%, a modest expansion compared to 2023’s 5.8% average
• Smaller transactions dominated the quarter, including:
  • 6918 Sierra Court, Dublin (8,830 SF) sold for $2.87M ($325/SF).
  • 4749 Bennett Drive, Livermore (4,240 SF) sold for $1.15M ($271/SF).
  • 425 Boulder Court, Pleasanton (2,850 SF) sold for $1.28M ($447/SF)

Owner takeaway: Despite higher borrowing costs, investors are still active in smaller deals. Well-leased assets with strong tenants continue to trade, though at slightly adjusted pricing.

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Leasing Highlights

• Notable lease transactions included:
  • 26,100 SF in Livermore (174 Lawrence Drive) to Terpene Belt, Inc. (flavoring sector).
  • 23,827 SF in Livermore (7650 Marathon Drive) to Villara, Inc. (construction services).
  • 9,145 SF in Pleasanton (5675 Sunol Blvd) to Sierra Roofing & Solar

Owner takeaway: Tenants from diverse industries — including manufacturing, construction, and renewable energy — are still driving demand for space in Tri-Valley.

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Looking Ahead to 2025

With interest rates stabilizing and renewed optimism heading into the new year, values are expected to remain stable. Market momentum may improve in 2025 as businesses gain confidence post-election and consider expansion.

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Key Takeaways for Bay Area Industrial Owners

• Vacancy is stable but elevated — focus on tenant retention and competitive concessions.
• Rents are steady near record highs, signaling continued tenant willingness to pay for quality assets.
• Sales pricing and cap rates are holding, showing investors are still engaged despite higher debt costs.
• Industry diversity in leasing demand provides stability across the Tri-Valley submarket.

Sean Offers, SIOR, Principal – Lee & Associates East Bay