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Institute Report: Q1 2018 Commercial Space Report

Commercial Space 2018 Q1 report coverOffice vacancy rates highest in six years; industrial vacancy rate lowest since 2000

April 25, 2018 - Vacancy rates for Silicon Valley office space increased to 17.4 percent in the first quarter of 2018 while the vacancy rate for industrial space dropped to an 18-year low of 2.9 percent, 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 five developments were completed in the quarter, accounting for nearly one million square feet of commercial office. The largest project was Midpoint@237 in north San Jose, where four buildings combined for 415,000 square feet.

Commercial space development in progress at the end of the quarter remained relatively high, reaching 7.47 million square feet, the report said.

“Commercial space asking rents have leveled off over the past year,” noted the report, “though long-term changes in office space rents have led to them more than doubling over the past 11 years (without adjusting for inflation).”

A total of 13.2 million square feet of new commercial space was under construction throughout the entire nine-county Bay Area in Q1, 57 percent of which was in Silicon Valley. Nearly half of the total is preleased.

More new Silicon Valley commercial space has been constructed since the beginning of 2015—nearly 21 million square feet—than during the previous 13 years combined.

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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.

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