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Commercial real estate sales up in Q3 to $6.3 billion - highest since 2015

cover imagePace of leasing has already eclipsed last year

Commercial space completions totaled 1.02 million square feet – lower than Q2

Many projects delayed due to pandemic, availability of materials, labor

November 10, 2021 – Leasing activity in the Silicon Valley market has become less volatile in the third quarter and investment activity is brisk, driving commercial real estate sales volume up to an aggregate of $6.3 billion — the highest since 2015. Overall, vacancy rates continue to stay at elevated levels, slightly widening the gap from pre-pandemic levels. Construction completions were limited but activity is expected to gain momentum as demand for nonresidential projects grows.

This is according to the latest analysis from Joint Venture Silicon Valley’s Institute for Regional Studies, in partnership with JLL Silicon Valley in their third-quarter Silicon Valley Commercial Space report, published today.

“Leasing activity was fairly brisk last quarter, keeping rental rates stable,” noted Ricky Manago, the Institute’s commercial real estate research lead. “The amount of square footage per lease did decline, however, which was likely a result of employers anticipating at least a partial continuation of remote work.”

“The relative resilience realized during the pandemic has buoyed big tech in Silicon Valley,” said Alexander Quinn, Northern California Director of Research for JLL. “The result is that Silicon Valley now has the lowest office vacancy rate of any major market in the U.S. There remains uncertainty as physical occupancy remains below 30% of pre-pandemic levels but recent commitments from big tech implies there will be a meaningful increase in office occupancy come the 1st Quarter of this year."

Key findings:

  • Silicon Valley’s Q3 commercial space completions totaled 1.02 million square feet — lower than Q2.
  • 02 million square feet of newly-completed commercial construction in Q3 was 97% pre-leased.
  • All Silicon Valley commercial projects completed in Q3 were Office.
  • A total of 7.14 million square feet of commercial space was completed through Q3 — surpassing 2020.
  • Of four notable large commercial space completions, 611,000 square feet is attributed to Google in North San Jose, and 269,000 square feet to ServiceNow in Santa Clara.
  • Many projects that were slated for completion in late 2020 were delayed due to pandemic construction materials and labor shortages.
  • There was more than 11.5 million square feet of commercial space under construction at the end of Q3.
  • Of commercial construction underway in Q3, 69% is Office, 20% Lab, 7% Flex/R&D, and 4% Industrial.
  • As a result of the pandemic, commercial leasing activity in 2020 was 57% of the prior year’s total (by square footage).
  • The pace of leasing through Q3 has already eclipsed last year’s figures, while new market entrants have diminished significantly (1.5%) in comparison to the 4-8% seen over the past few years.
  • The number of lease transactions is pacing towards 2018 and 2019 leasing figures; the average amount of square feet committed per lease is notably lower than the last three years.
  • There were over 650 commercial lease transactions through Q3 2021 compared to 480 in 2020 and 880 in 2019.
  • The region continues to have the lowest vacancy rates of any major market across the country.
  • Q3 vacancy rates were 13.3% for Office, 9.8% for Flex/R&D, 8% for Lab, and 3.8% for industrial space; higher than in 2019 and 2020, they are still significantly lower than the Great Recession highs of 2010.
  • Average office space vacancy rate through Q3 (13.3%) continues to grow, closing in on a five-percentage point gap since 2019 (8.6%).
  • Lab space vacancy rates spiked in 2021, reaching 8% in Q1 and remains elevated at 7% in Q2 and 8% in Q3.
  • Vacancy rates at locations near transit stations were more than three times higher in Q3 than in mid-2019.
  • Office space vacancy rates at locations within a 10-minute walk from public transit rose significantly during the pandemic and have remained higher than in locations not near transit.
  • Average rental rates remained relatively stable throughout 2021 for office and industrial, while R&D rental rates have yet to recover (down 16% since Q1 2020).
  • 1 million square feet of new commercial office space was under construction throughout the Bay Area. Of that, 6.5 million square feet (64%) has been preleased, primarily (84.6%) to tech companies.
  • Office space was 79% tenant-occupied and 21% owner-occupied in Q3 2021.

For further reference

Read the full third-quarter 2021 report on Silicon Valley commercial space.

For further reference

To access Silicon Valley’s online data hub, visit

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

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

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

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