Silicon Valley Office Vacancy Woes: Silicon Valley’s office spaces are experiencing a notable increase in vacancy rates, reaching 19.6% at the end of Q3 2023. This rise, a 1.5% increase from the previous quarter and about 2% YoY, reflects the ongoing impact of remote work on the commercial real estate market.
Demand for office space has weakened, leading to competition among landlords and companies subleasing their existing spaces. While Silicon Valley’s vacancy rate surpasses New York City’s at 16.5% and Washington, D.C.’s at 19.1%, it remains lower than San Francisco’s 30.4%, Austin’s 21.3%, and Boston’s 19.8%.
The region includes Santa Clara and San Mateo counties, along with the cities of Fremont and Newark in Alameda County. Commercial leasing in Silicon Valley has lagged behind, with 781 transactions through Q3 2023, a 39% decrease from 2022. Leasing volumes are expected to be the second lowest since 2017.
Completed commercial office projects in Q3 were nearly double the prior quarter, with 1.6 million square feet finished, contributing to an anticipated 6.4 million square feet by year-end. However, vacancy rates are likely to rise as new buildings are completed but remain unoccupied. Despite the increase in vacancies, commercial rents have shown “price stickiness,” with the market more likely to see an increase in concessions rather than drastic rent reductions.
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Our Reader’s Queries
What is the vacancy rate in Silicon Valley?
The Silicon Valley office space market saw a further increase in vacancy rates during Q3 2023, with rates rising to 19.6%. This represents a quarter-over-quarter growth of 1.5 percentage points. The vacancy rates for different types of spaces were as follows: 19.6% for Office, 15.2% for Lab, 10.1% for Flex/R&D, and 4.0% for industrial space.
Who is the founder of Silicon Valley?
Frederick Terman and William Shockley are commonly referred to as the pioneers of Silicon Valley.
Where does Silicon Valley take place?
Silicon Valley is an industrial hub located in the southern region of San Francisco Bay, California, USA. The intellectual core of this region is situated in Palo Alto, which is also home to the prestigious Stanford University. This area is known for its technological advancements and innovative ideas that have revolutionized the world.
What is Silicon Valley famous for?
Nestled in the South San Francisco Bay Area of California, Silicon Valley is a hub of technological innovation that has gained global recognition. The region owes its name to the primary material used in computer microprocessors. It is the birthplace of numerous major technology, software, and internet companies that have revolutionized the world.