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Institute Report: Huge amount of commercial space under construction; new high rivals dot com boom

black and white report coverMay 3, 2019 – Joint Venture Silicon Valley’s Institute for Regional Studies today released its first-quarter 2019 report on Silicon Valley commercial space. The report shows that activity is brisk and demand is high, especially for commercial space located near public transit.

While the largest share of recently-completed commercial space was preleased to tech companies, the report notes there is an uptick in speculative development. Office vacancy rates – which were relatively high between Q4 2017 and Q4 2018 due – fell significantly in Q1 2019 to 13.4%.

“There’s an incredible amount of commercial space under construction right now. Most of it is driven by the growth and expansion of tech companies,” said Rachel Massaro, Vice President and Director of Research at the Silicon Valley Institute for Regional Studies, “but there’s also quite a bit of office space throughout the Bay Area that hasn’t been preleased.”

The report shows that more Silicon Valley commercial space was under construction in Q1 2019 than during any other quarter since Q4 2000, and that office space vacancy rates fell significantly due to tenant demand.

Other key findings in Q1 2019 Silicon Valley Commercial Space Report:

  • Industrial space vacancy rates remain near an 18-year low at 2.7%
  • Average office space asking rents were 35% higher at locations near public transit
  • More than 12 million square feet are currently underway with 64% in office space
  • Completions totaled 600,000 square feet; 69% office and 31% industrial
  • Office space vacancy rates fell to 13.4% due to tenant demand
  • Vacancy rates in prime submarkets were at 3.7% to 6.4%.

Six large commercial developments were completed in Q1 – four buildings of Class A Office space and three Class A Flex/R&D buildings included in the Assembly at North First re-development of the former Lam Research Campus in North San Jose. Major projects are underway near Moffett Field (including more than a million square feet of development for Facebook, Microsoft’s campus, Google Cloud’s 6th building, and the Ameswell office/hotel development), Splunk’s new building at Santana Row, and the Thirty75Tech project in Santa Clara.

The quarterly report was prepared by Rachel Massaro, Vice President and Director of Research at the Silicon Valley Institute for Regional Studies in partnership with Heather Belfor, Research Manager at JLL Silicon Valley. The report includes San Mateo and Santa Clara Counties and the Cities of Fremont and Newark.

For further reference:

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

Complete data release and array of infographics

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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. 

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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