November 2, 2017 – More new office space was completed in Silicon Valley in the third quarter of 2017 than in any other quarter in more than two decades, the Silicon Valley Institute for Regional Studies reported today.
The Institute’s latest quarterly commercial real estate report, prepared in partnership with JLL Silicon Valley, shows that 4.54 million square feet of space was completed in Q3, while average office space asking rents continued to rise.
Despite the large increase in new space, the report noted, vacancy rates for office space actually decreased in the quarter, owing in part to large tech companies like Google and Palo Networks moving into newly developed, pre-leased space.
“Although demand for commercial office space had declined in the first half of 2017,” the report stated, “the third quarter saw a resurgence in demand with increased tenant touring activity and large tenants showing interest in expansion.
“This increased demand is reflected in lower vacancy rates overall in Q3, as well as an increase in the average office space rental throughout Silicon Valley. Newer buildings in particular were priced at premium rents, and rental rates rose for buildings in Caltrain-accessible submarkets.”
The report further said tenants needing smaller spaces are looking in San Mateo County, and that higher rents in communities like Palo Alto and Mountain View are driving tenants north.
Expansion by tech giants like Google and others affects the commercial real estate landscape in Silicon Valley, and the rising cost of housing in the Bay Area may have a strong impact on companies’ decisions as their leases expire and they look to other areas for real estate, said the report.
About the Silicon Valley Institute for Regional Studies
The Silicon Valley Institute for Regional Studies provides research and analysis on a host of issues facing Silicon Valley’s economy and society. The Institute is housed within Joint Venture Silicon Valley. 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 Silicon Valley
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. For further information, visit www.jll.com/silicon-valley.