Throughout the pandemic, the Silicon Valley R&D market has remained resilient due to manufacturing and lab requirements that are inherently difficult to offshore and/or operate remotely. This sentiment may change as rising interest rates and softening demand may cause companies to scale back recent growth plans in lieu of cost cutting and layoffs. For example, electronics contract manufacturer Jabil cut 1,269 employees and robotics and autonomous driving company Nuro also let go of 269 employees, both in Q4 2022.
The effects of recent layoffs have yet to ripple through real estate market fundamentals in the R&D market. The asking rate ticked downward quarter-over-quarter from $2.59 NNN to $2.56 NNN. Total availability has also remained relatively flat quarter-over-quarter, inching up from 12.1 million square feet to 12.5 million square feet.