As 2025 kicks off, the Tri-Valley region of California finds itself at a pivotal moment in the industrial real estate sector. The year began with a mix of cautious optimism and grounded realism, as market participants continue to adjust to shifting economic dynamics and a changing demand landscape. While the broader national market is contending with interest rate uncertainty and evolving industrial needs, the Tri-Valley—encompassing Livermore, Dublin, and Pleasanton—enters the year with a pragmatic outlook. Local landlords, brokers, and investors are all closely monitoring indicators that suggest a cooling, but not collapsing, environment. It’s a time of recalibration rather than retreat, as stakeholders focus on staying competitive and responsive to the market’s signals.

The Tri-Valley industrial real estate market in the East Bay is navigating a transitional period as we move through the first quarter of 2025. While conditions have held relatively steady, there is a clear trend toward softening. A notable influx of supply—more than the region has seen in the past five years—is prompting landlords to reevaluate and reposition their asking rents to stay competitive. On the investment front, many institutional buyers remain on the sidelines, waiting for greater market clarity, although deals are still trickling through in the owner-user space. This tempered activity leads to a cautiously optimistic outlook for the remainder of the year.

Key market indicators reinforce the shift. Vacancy rates have crept up to 11.2%, continuing a gradual rise from 10.0% the previous quarter. The market also saw a 12-month net absorption of -464,336 square feet, signaling more space is becoming available than is being leased. Despite the softness, average asking rents have only slightly declined, with NNN rates averaging $22.71 per square foot, and sale prices are holding relatively stable at $319 per square foot. Cap rates ticked up slightly to 6.1%, reflecting increased investor caution. There have been no new industrial developments under construction, and inventory remains unchanged at just under 29.5 million square feet.

A few noteworthy lease deals occurred during the quarter, including a 7,100-square-foot transaction in Dublin and two Pleasanton deals involving Amtec Industries and Subway Development. On the sales side, a 6,111-square-foot property in Livermore changed hands, along with two smaller but high-value deals: a 4,659-square-foot sale to Tri-Valley Bread of Life Christian Church in Pleasanton at over $426 per square foot, and a 4,364-square-foot building purchased by De Haro Construction in Livermore for nearly $470 per square foot. While the market continues to face headwinds, these transactions show there’s still meaningful activity taking place—especially among local users with specific needs.