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Pleasanton’s Hacienda Business Park, one of the largest business hubs in the state, has seen a decline in occupancy since the start of the year and is experiencing increased vacancy rates, the business park stated in its second quarter update.
According to a press release from Hacienda, the shift in occupancy rates has been largely due to Party City and Kohl’s closing, among other things. Both those closures, according to the business park, have accounted for “more than 55% of the negative absorption”.
“These were very large spaces that contributed significantly to the total loss (net absorption loss) noted above,” Hacienda General Manager James Paxson explained. “Combined, they represent over a third of the space lost during the first two quarters.”
The business park is a 875-acre development that houses a “broad range of industries, from biomedical and technology to restaurants and retail”. At the end of the first quarter in 2025 there were 669 companies in the business park that employed just under 14,500 people, officials wrote in the press release.
In addition to being a business hub, Hacienda is also home to about 5,800 residents — that number is expected to increase to 6,400 thanks to ongoing housing developments.
But despite anticipated improvements in occupancy rates due to new developments and favorable prospects — which the business park said could help occupancy get to pre-pandemic levels — the business park has faced significant challenges this year.
“Hacienda experienced a further decline in occupancy at the start of 2025,” the press release states. “By the end of the second quarter, the vacancy rate had climbed to 18.86%, compared to 15.22% at the end of 2024.”
Specifically in July, the monthly occupancy declined from 6,628,368 square feet to 6,602,979 square feet.
The press release also explained that net absorption, which is the net change in occupied space within a specific market over a given period, has remained negative in the second quarter and totaled nearly 300,000 square feet. For comparison, the net absorption in 2024 was positive 43,921 feet.
“This is a net change in building occupancy. It means that we lost more tenant space than we gained in the last two quarters,” Paxson said. “When I say lost and gained, I do not mean that space was removed from the market or added to it, simply that more space became vacant owing to tenant departures than space occupied owing to tenant arrivals.”
But despite these challenges, the business park is hopeful that it will see more positive numbers and overall improvement during the rest of the year thanks to, in part, “additional transactions anticipated along with opportunities for a rise in local market activity.”
While he couldn’t disclose any prospective tenant activity, Paxson told the Weekly the business park has seen some activity that he believes will make its way to Hacienda due to its high value.
“Regionally and nationally, there are signs that the office market is strengthening,” Paxson said. “While I do not believe we will see a rapid recovery, I do believe that the fundamentals that are reflected in the current trends toward office recovery will eventually exhibit themselves in Hacienda, Pleasanton and the Tri-Valley as a whole.”
He also said that certain major lease agreements that the business park secured over the past year have also helped in maintaining Hacienda’s long-term appeal.
“We have had several of the largest transactions in the I-680 corridor over the last year or so,” Paxson said.
Two leases he noted were Sutter Bay Medical Foundation leasing 64,222 square feet at 4480 Willow Road for new clinic facilities and ACCO Engineered Systems — a heating, ventilation and air conditioning company — leasing 67,757 square feet at 5890 Owens Drive.
Sutter Health’s Palo Alto Medical Foundation also recently signed a 23,000-square-foot lease at 5075 Hopyard Road as part of the foundation’s broader plan to “open more than 25 new ambulatory care centers across its network,” according to Hacienda’s press release.
“Renovations for these facilities are set to begin this year, with openings planned for 2026 and 2027,” officials said.
In July, leasing activity was also primarily driven by smaller spaces with units under 10,000 square feet making up almost 95% of all transactions during that month as well as just over 71% of the total square footage leased. For comparison, spaces between 10,000 and 50,000 square feet made up roughly 5% of all transactions.
According to the business park, this shows how tenants tend to favor smaller, more flexible spaces due to “shifting operational demands and continued economic uncertainty”.
Still, Paxson stated in the press release that a diverse tenant mix, continued employment opportunities and future tenant prospects will help Hacienda remain strong and competitive despite the challenges of the Bay Area real estate market this year.
“The flow of new leases — especially from essential sectors like healthcare and advanced services — shows that businesses continue to see long-term value in locating at Hacienda,” Paxson said in the press release. “We are encouraged by the pipeline of transactions ahead and remain confident that Hacienda’s diverse tenant base and prime location will support continued recovery and growth through the rest of 2025 and beyond.”
