Silicon Valley’s Office Market Shows Signs Of Recovery
USA – Data from property consultancy Colliers shows that the office leasing market of Silicon Valley is starting to rebound from the gloom inflicted by the COVID-19 pandemic, reported The Mercury News on Saturday (9 October).
In Q3 2021, average monthly asking rents of office space there reached US$5.35 psf, the highest on record, said Colliers’ Research Director Lena Tutko. For the real estate consultancy, Silicon Valley’s office market encompasses Fremont city and Santa Clara County.
“Silicon Valley is absolutely emerging from the doldrums of the pandemic and stay-at-home mandates,” said Sean Toomey, Senior Vice President at Colliers.
“This is further noted by increases in traffic on our Silicon Valley freeways, ridership on Caltrain, and in tenant touring as many companies prepare for a projected January return-to-work environment.”
Another positive sign for Silicon Valley’s commercial real estate market is that rents for all property categories – including office space, R&D premises, and industrial – have increased during the third quarter.
Besides a decline in vacancy levels for industrial and research space, office rental deals topped 2 million sq ft for 2 straight quarters.
In addition, sublease space is beginning to fall. Sublease space for all three asset types, office, research and industrial, reached 9.3 million sq ft in Q3 2021. That’s a significant drop from the 9.8 million sq ft witnessed during the previous quarter.
“Silicon Valley residents have become more willing to venture back out into the community. Landlords and tenants are now connecting to ensure that work environments are safe and socially distanced and ready for the return,” noted Toomey.
Among the top commercial real estate acquisitions in Silicon Valley during the quarter under review is the US$535 million purchase of the HQ @ First, a tech complex comprising 3 office buildings in San Jose.