The Silicon Valley R&D market remained stable but continued to show indications of potential future softening. Vacancy remained flat quarter-over-quarter (QoQ), however year-over-year (YoY) vacancy increased 0.7% to 9.5%. Overall availability rose 0.2% QoQ to 12.8%. Average asking rents declined for the ninth consecutive quarter, falling 2.4% to $2.77 psf. Net absorption was slightly negative at 11K SF, marking the ninth quarter of negative absorption in the past ten.
Despite short-term headwinds, several enterprise firms reaffirmed their long-term commitment to Silicon Valley through property acquisitions. The "flight to control" indicates a growing trend of ownership, allowing occupiers to avoid lease volatility and tailor space to suit R&D activities. Nonetheless, move-in ready lab space remains in short supply, and long term infrastructure constraints, including heavy power, continue to limit new development. In addition, tariff uncertainty is adding another level of complexity, specifically for those companies with global supply chain exposure.
Despite short-term headwinds, several enterprise firms reaffirmed their long-term commitment to Silicon Valley through property acquisitions. The "flight to control" indicates a growing trend of ownership, allowing occupiers to avoid lease volatility and tailor space to suit R&D activities. Nonetheless, move-in ready lab space remains in short supply, and long term infrastructure constraints, including heavy power, continue to limit new development. In addition, tariff uncertainty is adding another level of complexity, specifically for those companies with global supply chain exposure.