The office vacancy rate in Silicon Valley fell for the first time since the pandemic, a potential sign of recovery in the area, according to a new report.
Average vacancy rates for office space improved to 10.6 percent during the first quarter of 2022, from 10.8 percent in the previous quarter, according to the San Jose Mercury News, citing a report by Colliers.
The vacancy rate had been climbing since the dawn of the pandemic in early 2020. It rose steadily from 9.4 percent in the first quarter of 2021 before approaching 11 percent to end last year.
“Following a two-year pandemic, Silicon Valley’s office market remains on solid ground,” Colliers stated in the new report.
Colliers defines Silicon Valley as Santa Clara County and the City of Fremont.
The worst office submarket in the region during the first quarter was the City of Santa Clara, where the average office vacancy was 19.3 percent, nearly double the rate for the entire region. The high rate was attributed to 2.03 million square feet of space available in four big tech campuses.
The first-quarter vacancy rate in San Jose was 11 percent, followed by 5 percent in Cupertino-Saratoga, 5.2 percent in Mountain View and 6.7 percent in Sunnyvale, according to Colliers, with major tech companies driving the office market.
Google, Apple, Facebook app owner Meta Platforms, LinkedIn and Amazon have expanded into new offices through leases or purchases, while companies such as Yahoo and Roku have leased large offices in the Coleman Highline tech campus in San Jose.
Life science, biotech, pharmaceutical and medical device companies are on the prowl for R&D sites to accommodate growth.
“It appears that office vacancies have plateaued,” said Lena Tutko, the Colliers research director for Silicon Valley and the Peninsula. “The office market is improving.”
The Silicon Valley office market shattered sales records in 2021, in any case, with buyers spending $8.71 billion on office buildings and R&D properties.
[San Jose Mercury News] – Dana Bartholomew
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Silicon Valley office market shattered records in 2021