2021 News Releases

News Release: Q2 commercial leasing activity exceeds 2020 by 50%

Cover image of the 2021 Commercial Space report for Q2August 6, 2021 – The pace of Silicon Valley commercial space development far exceeds that of 2020, according to the latest analysis from Joint Venture Silicon Valley’s Institute for Regional Studies, in partnership with JLL Silicon Valley in their second-quarter Silicon Valley Commercial Space report, published today. The analysis indicates expected deliveries of more than 12 million square feet to the market in 2021. A large share of leased square footage is accounted for by companies expanding their real estate footprints. Asking rents have remained relatively stable, while vacancy rates have risen due to tenant move-outs and new space on the market.

“While 2021 commercial leasing by square footage is up by 50% over 2020, the number of lease transactions in the first half of the year is only up by 18%,” noted Rachel Massaro, the Institute’s Director of Research. “This indicates that a growing amount of square footage is being taken up per tenant, with lessees adding to their real estate footprints through a combination of expansion or blend and extend leases.”

“Silicon Valley’s office vacancy rate is the lowest of any major market in the country,” said Alexander Quinn, Director of Research for JLL, Northern California. Nearly all markets across the U.S. saw significant negative absorption from Q1 2020 to Q2 2021 but Silicon Valley’s was actually positive. This is partially driven by pre-leased deliveries but it’s also likely due to the relative resiliency of Silicon Valley companies during the pandemic.”

Key Findings:

  • New Construction. The amount of new commercial space delivered in Q2 alone was more than any other quarter since prior to the pandemic (Q4 2019). Of the 5.52 million square feet of new construction, more than one million was lab space in San Mateo County.
  • Leasing Activity. The pace of leasing in the first half of 2021 ticked up slightly, with the greatest change occurring in companies expanding and/or extending their leases.
  • Vacancy Rates. Office space vacancy rates rose in Q2, reaching 13% — largely due to four large tenants vacating more than 615,000 square feet of space in Santa Clara, Sunnyvale, and San Jose.
  • Asking Rents. Average rental rates remained relatively stable throughout 2020 for office, industrial, and lab space, while dropping significantly for R&D (down 17% since Q1 2020).
  • Occupancy. Of the 10.5 million square feet of new commercial office space under construction throughout the Bay Area, 7.5 million square feet (71%) has already been preleased. Silicon Valley office space remains largely tenant-occupied (79%), with owner-occupants accounting for 21%. This compares to 76% and 24%, respectively, in Q2 of 2020.

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For further reference

To access Silicon Valley’s online data hub, visit www.siliconvalleyindicators.org.

About the Silicon Valley Institute for Regional Studies

The Silicon Valley Institute for Regional Studies is the research arm of Joint Venture Silicon Valley, and is housed within the organization. The Institute provides research and analysis on a host of issues facing Silicon Valley’s economy and society. For more information, visit www.siliconvalleyindicators.org.

About Joint Venture Silicon Valley

Established in 1993, Joint Venture provides analysis and action on issues affecting the Silicon Valley economy and quality of life. The organization brings together established and emerging leaders—from business, government, academia, labor and the broader community—to spotlight issues, launch projects and work toward innovative solutions. For more information, visit www.jointventure.org.

About JLL

JLL is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. www.jll.com/silicon-valley.

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