SAN JOSE, Calif — The office vacancy rate in Silicon Valley improved during the first three months of 2022, a sign that the office sector is starting to recuperate from coronavirus-linked maladies, a new report indicates.
Average vacancy rates for office space improved to 10.6% during the January-through-March first quarter of 2022, reported Colliers, a commercial real estate firm.
“The vacancy rate decreased for the first time in two years, a positive sign for the market,” Colliers stated in the new report. “Following a two-year pandemic, Silicon Valley’s office market remains on solid ground.”
The latest vacancy rate marked an improvement from the 10.8% average level in Silicon Valley that Colliers measured in the October-through-December fourth quarter of 2021.
Still, some weakness remains in evidence: The current vacancy rate, however, is higher than office vacancies in Silicon Valley in the first quarter of 2021, when they averaged 9.4%.
Plus, office vacancy levels in Silicon Valley have been at 10% or higher for three consecutive quarters, the Colliers report determined. Colliers defines Silicon Valley as Santa Clara County and Fremont.
The worst office market in the region during the first quarter was the city of Santa Clara.
Santa Clara office vacancy rates were 19.3% in Santa Clara in the first quarter, nearly double the rate for the entire region.
Among the reasons for the sky-high vacancy rate in Santa Clara: A jaw-dropping 2.03 million square feet of space is available in four big tech campuses, according to summaries provided to this news organization by Colliers.
The largest of these is Mission 101 on Mission College Boulevard, with 700,000 square feet available for lease.
San Jose’s vacancy rate was 11% in the first quarter, Colliers reported.
Cupertino, Mountain View and Sunnyvale were the strongest office markets.
“A lot of the transactions that are really driving the market are from the major tech companies,” said Lena Tutko, the Colliers research director for Silicon Valley and the Peninsula.
Google, Apple, Facebook app owner Meta Platforms, LinkedIn and Amazon have been particularly active in expanding into new office spaces through leases or purchases.
And other companies such as Yahoo and Roku have leased big chunks of office space in San Jose’s Coleman Highline tech campus.
The office vacancy rate in the first quarter was 5% in Cupertino-Saratoga, 5.2% in Mountain View and 6.7% in Sunnyvale, according to Colliers.
Separately, vacancy levels in the research and development sector looked healthy in the first quarter. The vacancy rate for research space was 7.7% in the January-March quarter, an improvement from the 7.9% vacancy rate during the fourth quarter of 2021.
Life science, biotech, pharmaceutical and medical device companies hunger for research and development sites to accommodate their growth.
“It appears that office vacancies have plateaued,” Tutko said. “The office market is improving.”
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