Silicon Valley’s R&D market rental rates remained flat quarter-over-quarter. Mountain View and West Valley both experienced steep decreases in rates, effectively equalizing overall rates. Vacancy rates experience a 94-bps decrease to dip below 10.0%, with such vacancy rates not seen since the end of 2020.
Leasing activity increased from the previous quarter, recording a 26.9% increase, or a 414,000 square foot increase in transaction volume. Unlike the office sector, the R&D sector was not as affected by remote work as many tenants continued at least partial operations on premises through the pandemic as lab research and assembly cannot be done remotely. Overall optimism spans the R&D sector regarding full operations as return to workplace plans solidify, tenants and investors will resume their appetite for occupancy and acquisitions.