Fresno's office market is insulated from the worst market swings seen in the coastal markets, propped up by a trinity of sectors — health care, education and government.

Fresno’s office market entered the new year on relatively firm footing, led by health care, education and government users even as national markets deal with increased vacancies and uncertain return-to-office trends.

“It’s not what I’d call great, but it could be a heck of a lot worse,” said Bobby Fena, senior vice president and principal at Colliers International. “When you compare the Central Valley to the Bay Area, things happen quickly in those markets. It doesn’t move that fast in the Valley.”

Fena said Fresno’s slower cycle has insulated the region from the swings that are seen in the coastal metros. While the Bay Area office vacancy has risen above 30%, Fresno and Clovis metro remain around 8 and 9%.

Health care continues to be a standout in the market. Fena pointed to the sustained development around Clovis Community Medical Center, where medical and dental offices continue to fill up quickly.

“Those buildings, as quickly as they get built, they’re filling up,” he said. “If you’re trying to find existing office space anywhere in Clovis, particularly medical or dental office space, it’s really hard to find.”

Veronica Stumpf, a broker with Stumpf and Company Real Estate and a Certified Commercial Investment Member (CCIM) designee, described the Fresno office market as being in the late recovery and early expansion.

Like Fena, Stumpf said that asking rents have remained steady compared to those in San Francisco and Los Angeles, but noted that competition is heating up for modern, high-quality space.

“There’s a growing demand for Class A office space,” Stumpf said. “But Class A office space only makes up about 7% of the total inventory, so it’s very competitive.”

A majority of Fresno’s inventory falls into Class B and C categories, which are buildings that are functional but dated. This mismatch, Stumpf said, is forcing landlords to determine whether to invest in upgrades or compete on price.

“Landlords are having to take a step back and assess, what do I do with this outdated office space?” she said. “Do I spend a lot of money to make it more functional, or do I stay competitive by offering my office space for well below market rent?”

Tenant behavior has also shifted a bit. Shorter lease terms and smaller footprints have become more common, mainly among smaller office users.

“Office users have learned that they need to be highly flexible and adaptive to future economic changes,” Stumpf said. “What used to be a five-year lease, they’re asking for a three-year lease or a two-year lease.”

James Bitter with Fortune Associates shared the same sentiments as Fena and Stumpf, saying that tenant improvement costs are shaping deal-making, while noting the limited medical space available.

“General office space seems to have ticked up a bit, but tenant improvements continue to be the driver of all deals,” Bitter said. “The medical office continues to be the prize with a vacancy near zero north of Shaw Avenue.”

Submarkets in north Fresno, northwest Fresno and Clovis continue to attract the most interest. This is in large part due to the close proximity to medical campuses and new professional service centers.

“That’s where you’re going to see your highest return, that’s where you get to the top rents, and that’s where you’re going to see the top demand,” Stumpf said.

Employment projection trends suggest that these trends are likely to continue over the next five years. According to Fresno County Economic Development Corporation’s 2025-2030 forecast, health care support jobs are projected to grow by 5,214 jobs, a 12.8% increase, while health care practitioners and technical roles are expected to add 2,359 jobs. Educational instruction and library occupations are forecast to grow by 2,245 jobs.

The expected employment increases could lead to demand for office space. Stumpf estimates Fresno could need between 2 million and 2.5 million square feet of office space over the next five years.

“Developers and landlords are going to have existing office inventory, they’re going to have to reposition their office space so it meets the demands of health care, education and public-serving tenants,” she said.

Fena added that financing conditions have improved after a cautious start to 2025, with lenders reengaging as deal flow picked up as the year went on.

“There’s plenty of financing available out there, and lenders are calling us every week, anxious to lend money,” he said. “I wouldn’t say it’s great, but it’s a hell of a lot better than it’s been for the last couple years.”

Looking ahead, Stumpf said adaptive reuse and office-to-residential conversions is something to keep an eye on, mainly in Downtown Fresno.

“How realistic is it going to be to convert those into high-density apartment residential?” she said. “What’s your return on your investment? Is an underwriter going to agree to lend you money to make that conversion?”

For now, brokers say the market’s stability that is anchored by health care, education and government tenants continues to set Fresno apart from larger, more volatile office markets.

“We still have land available to build,” Fena said. “That continues to attract a lot of businesses here.”