In Q3, the Silicon Valley office market showed signs of stabilization after several years of lackluster performance. Asking rates remained flat QoQ at $5.23, marking the first time since 2020 that rates have not declined. Similarly, availability remained unchanged QoQ, decreasing just 0.1%. Over the past three quarters, vacancy has remained flat or decreased slightly. The bulk of new vacancy was driven by the Fremont/Newark submarket, adding 457K SF, contributing more than all the other submarkets combined. Q3 recorded the first quarter this year with negative net absorption, however, YTD net absorption has totaled 665K SF.
In a promising development, San Jose announced that starting in early 2025, it will offer new downtown office tenants or owner-occupiers two years of free parking and an exemption from city business taxes. Additionally, Amazon announced that starting in 2025, all corporate employees will return to the office, helping boost office utilization and foot traffic.
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