Silicon Valley’s R&D overall vacancy rate increased quarter-over-quarter, which applied downward pressure on asking rental rates in most submarkets. Palo Alto recorded the largest decrease of the quarter of $0.32/sf/month, while the West Valley submarket recorded the largest increase of the quarter at $0.28/sf/month. Milpitas was the only submarket with a significant decrease in vacancy quarter-over-quarter, while Cupertino, the West Valley, and Santa Clara essentially remained flat. On the contrary, larger vacancy rate increases in Sunnyvale (1.7%) and Mountain View (0.9%) better reflected the overall trend in the Valley this past quarter.
Leasing activity in Q3 2021 increased by 28.71% from Q2 2021, equating to a 771,226 square foot increase in transaction volume. Although overall transactions metrics were down quarter over-quarter, the R&D market is reasonably insulated against the potential long term impact of remote work as much of the work completed inside R&D buildings cannot be completed in a residential setting. Optimism and stability remains strong as large acquisitions, continued developments, and stabilized rates continue to drive the R&D sector through 2021.