The following reflects Silicon Valley industrial market conditions as of Q3 2026.
MARKET DRIVERS
Since the last quarter, availability rates decreased 80 basis points (bps) to 4.4% for industrial space, while warehouse availability fell 60 bps to 6.5%. Industrial availability is now 200 bps below the same time last year, while warehouse availability is also 200 bps lower.
Total vacancy rates improved across both product types. Industrial vacancy dropped 70 bps quarter-over-quarter (QOQ) to 4.6%, which is 40 bps below the same time last year. Warehouse vacancy decreased 70 bps QOQ to 6.7% but remains 40 bps higher year-over-year (YOY).
Direct asking rates for industrial properties are down 4.7% YOY, reaching $1.83/SF NNN. Despite the decline, this rate remains above the 5-year average. Warehouse properties increased 8.2% over the same time frame, reaching $1.72/SF NNN, continuing the divergence in pricing between the two product types.
For Industrial, leasing activity is 24.4% higher than last year’s cumulative activity to this point, reaching 1.8M SF year-to-date. Warehouse activity is also 24.2% higher than it was at this point in 2025, with 3.5M SF leased through the first three quarters of the year.
Sales activity increased across both product types. Industrial sales volume reached 1.7M SF year-to-date, 118.4% higher than last year’s cumulative total. Warehouse sales volume reached 1.2M SF through the third quarter, 58.3% higher than the same period last year.
Industrial’s net absorption was positive for the third straight quarter, totaling 563.5K SF in 3Q and bringing year-to-date absorption to 1.1M SF. Warehouse absorption also turned positive, totaling 319.0K SF for the quarter and reducing year-to-date negative absorption to 56.4K SF.
ECONOMIC OVERVIEW
California’s unemployment rate held at 5.1% in August 2026, while Santa Clara County recorded a 4.3% unemployment rate, remaining below the state average.
The manufacturing and trade, transportation, and utilities job sectors in the San Jose-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) continued to expand modestly. Manufacturing employment reached 131.4K jobs in August 2026, up 1.4% YOY, while trade, transportation, and utilities employment totaled 117.3K jobs, up 0.7% YOY.
NEAR-TERM OUTLOOK
The Silicon Valley industrial market continued to strengthen through the third quarter of 2026, with improving fundamentals extending beyond the industrial segment into warehouse space. Industrial vacancy declined to 4.6% and availability tightened to 4.4%, while 563.5K SF of positive absorption brought year-to-date absorption to 1.1M SF. Although quarterly industrial leasing volume was comparatively modest, cumulative leasing activity remains 24.4% ahead of last year’s pace, indicating that earlier tenant demand is translating into tighter occupancy conditions.
Warehouse fundamentals also improved during the quarter. Vacancy declined to 6.7% and availability fell to 6.5%, while quarterly absorption turned positive at 319.0K SF after remaining negative through the first half of the year. Warehouse leasing activity remains 24.2% above last year’s cumulative pace, and asking rents increased 8.2% YOY to $1.72 PSF NNN. Together, these trends suggest that the gap between the stronger industrial segment and the softer warehouse market narrowed during the third quarter, even as warehouse vacancy remains slightly above its year-ago level.
Recent transactions continue to point to demand for functional industrial facilities serving manufacturing, distribution, and technology-related users. Quanta Computer signed a 198.8K SF lease at 8311 Central Avenue in Newark, while Wismettac Asian Foods leased 174.6K SF at 48688 Fremont Boulevard. Investment activity also remained active: Wistron Corporation acquired 48105 Warm Springs Boulevard in Fremont for $120M, and Lift Partners purchased 1885 Las Plumas Avenue in San Jose for $18.35M. The latter property includes 3,400 amps of power capacity and is planned for capital improvements and lease-up, underscoring the value of functional infrastructure in the region’s industrial inventory.
Silicon Valley’s industrial market appears better balanced than earlier in the year. Industrial and warehouse availability are both 200 bps below year-ago levels, and both product types recorded positive absorption in the third quarter. Power capacity should remain an important differentiator, as AI, semiconductor, robotics, and advanced-manufacturing companies compete for facilities capable of supporting energy-intensive operations. With year-to-date sales and leasing activity ahead of 2025 levels across both product types, performance should remain strongest in well-located buildings with modern loading, power, and flexible configurations.
Frequently Asked Questions
What is the industrial vacancy rate in Silicon Valley in Q3 2026?
Silicon Valley’s total industrial vacancy rate was 4.6% in Q3 2026, down 70 basis points quarter-over-quarter and 40 basis points below the year-ago level of 5.0%, according to Kidder Mathews research. Total availability also tightened to 4.4%, 200 basis points below the same period last year. Warehouse vacancy moved differently, decreasing 70 basis points quarter-over-quarter to 6.7% but remaining 40 basis points above its year-ago level of 6.3% (Data source: CoStar).
How much industrial leasing activity took place in Silicon Valley through Q3 2026?
Industrial leasing activity reached 342,513 SF in Q3 2026 alone and 1,758,153 SF year-to-date, 24.4% higher than the same point in 2025. Warehouse leasing activity totaled 965,145 SF for the quarter and 3,495,406 SF year-to-date, up 24.2% year-over-year (Data source: CoStar). The largest lease of the quarter was Quanta Computer’s 198,768 SF new lease at 8311 Central Avenue in Newark.
What was net absorption for Silicon Valley industrial and warehouse space in Q3 2026?
Net absorption measures the change in occupied space over a period; positive absorption means more space was leased and occupied than vacated. Silicon Valley industrial recorded positive direct net absorption of 563,526 SF in Q3 2026, its third consecutive positive quarter, bringing year-to-date absorption to 1,149,097 SF, according to Kidder Mathews research. Warehouse absorption also turned positive at 319,014 SF for the quarter, narrowing year-to-date negative absorption to -56,386 SF.
What are current industrial and warehouse asking rents in Silicon Valley?
Direct industrial asking rents averaged $1.83/SF/month NNN in Q3 2026, down 4.7% year-over-year but still above the 5-year average, according to Kidder Mathews research. Warehouse asking rents averaged $1.72/SF/month NNN, up 8.2% year-over-year. Rates varied by submarket, ranging from $1.31/SF for industrial in Newark up to $2.97/SF for industrial in Mountain View (Data source: CoStar).
How much industrial and warehouse space is under construction in Silicon Valley?
A combined 1,459,910 SF of industrial and warehouse space was under construction in Silicon Valley as of Q3 2026 — 787,357 SF industrial and 672,553 SF warehouse, according to Kidder Mathews research. The largest projects underway include the 464,267 SF Campus @ Bayside in Fremont (Clarion Partners, delivering October 2026) and a 333,400 SF build-to-suit for SuperMicro at 550 E. Brokaw Rd in San Jose, delivering December 2027.
What was the largest industrial sale in Silicon Valley in Q3 2026?
The largest sale of Q3 2026 was Wistron Corporation’s $120,000,000 acquisition of 48105 Warm Springs Boulevard in Fremont, a 375,200 SF property that traded at $319.83/SF, according to Kidder Mathews research. The seller was Link Logistics Real Estate. The second-largest sale was Galvanize Real Estate’s $93,700,000 purchase of 901-931 Cadillac Ct in Milpitas at $310.80/SF (Data source: CoStar).
What was the largest industrial lease signed in Silicon Valley in Q3 2026?
The largest lease of Q3 2026 was Quanta’s 198,768 SF new lease at 8311 Central Ave in Newark, signed in September 2026 with landlord Prologis, Inc., according to Kidder Mathews research. The second-largest was Legacy Transportation Services’ 194,536 SF renewal at 935 McLaughlin Ave in San Jose, followed by Wismettac Asian Foods’ 174,578 SF new lease at 48688 Fremont Boulevard (Data source: CoStar).
How did industrial sales volume in Silicon Valley perform in Q3 2026?
Industrial sales volume reached 712,924 SF in Q3 2026 and 1,748,951 SF year-to-date, 118.4% higher than the same period in 2025, according to Kidder Mathews research. Warehouse sales volume totaled 756,799 SF for the quarter and 1,237,754 SF year-to-date, up 58.3% year-over-year (Data source: CoStar).
What is the outlook for the Silicon Valley industrial market heading into Q4 2026?
The outlook is more balanced than earlier in 2026, with both industrial and warehouse availability sitting 200 basis points below year-ago levels and both product types posting positive Q3 absorption, according to Kidder Mathews research. Power capacity is expected to remain a key differentiator as AI, semiconductor, robotics, and advanced-manufacturing users compete for energy-capable facilities, and performance is expected to remain strongest in well-located buildings with modern loading and flexible configurations.
Last updated: Q3 2026. Data source: CoStar, EDD, BLS, Silicon Valley Business Journal. Compiled by the Kidder Mathews Research Group.
Q3 2026 Silicon Valley Industrial Market: Key Data Points
Explore our full Silicon Valley industrial market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Industrial vacancy and availability: Total industrial vacancy fell 70 bps QOQ and 40 bps YOY to 4.6%, while availability tightened 200 bps YOY to 4.4%.
- Warehouse vacancy and availability: Total warehouse vacancy rose 40 bps YOY to 6.7% despite a 70 bps QOQ decline, while availability tightened 200 bps YOY to 6.5%.
- Net absorption: Industrial posted its third straight positive quarter at 563,526 SF (1,149,097 SF YTD); warehouse absorption turned positive at 319,014 SF for the quarter, narrowing YTD absorption to -56,386 SF.
- Asking rents: Industrial rents fell 4.7% YOY to $1.83/SF/mo NNN, while warehouse rents rose 8.2% YOY to $1.72/SF/mo NNN.
- Leasing activity: Industrial leasing reached 1,758,153 SF YTD (up 24.4% YOY); warehouse leasing reached 3,495,406 SF YTD (up 24.2% YOY).
- Sales activity: Industrial sales volume reached 1,748,951 SF YTD (up 118.4% YOY); warehouse sales volume reached 1,237,754 SF YTD (up 58.3% YOY).
- Biggest sale of the quarter: Wistron Corporation acquired 48105 Warm Springs Blvd in Fremont for $120,000,000 ($319.83/SF) from Link Logistics Real Estate.
Industrial Submarket Statistics
| Submarket | Total Inventory (SF) |
SF Under Construction |
Direct Vacancy Rate |
Total Vacancy Rate |
3Q26 Direct Net Absorption (SF) |
YTD Direct Net Absorption (SF) |
3Q26 Leasing Activity (SF) |
Average Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| Campbell | 928,853 | 0 | 18.0% | 18.3% | -7,966 | -9,705 | 21,948 | $1.67 |
| Cupertino | 537,376 | 0 | 0.0% | 0.0% | 0 | 0 | 0 | — |
| Fremont | 11,897,508 | 253,801 | 2.1% | 2.9% | -43,009 | 217,097 | 175,745 | $2.34 |
| Milpitas | 4,209,506 | 0 | 7.1% | 7.8% | 6,000 | 69,848 | 0 | $1.86 |
| Mountain View | 739,219 | 0 | 3.6% | 3.6% | 14,980 | -20,987 | 0 | $2.97 |
| Newark | 2,906,686 | 0 | 5.4% | 5.8% | 225,397 | 185,202 | 24,000 | $1.31 |
| Palo Alto | 1,363,847 | 0 | 1.0% | 1.0% | -2,600 | 59,334 | 0 | $2.03 |
| San Jose | 15,549,237 | 426,556 | 5.9% | 5.9% | 319,511 | 519,460 | 96,941 | $1.66 |
| Santa Clara | 7,253,349 | 107,000 | 3.8% | 4.1% | 52,313 | 147,509 | 23,879 | $1.75 |
| Sunnyvale | 3,967,549 | 0 | 0.5% | 0.5% | -1,100 | -18,661 | 0 | $2.73 |
| Silicon Valley Industrial Total | 49,353,130 | 787,357 | 4.3% | 4.6% | 563,526 | 1,149,097 | 342,513 | $1.83 |
Warehouse Submarket Statistics
| Submarket | Total Inventory (SF) |
SF Under Construction |
Direct Vacancy Rate |
Total Vacancy Rate |
3Q26 Direct Net Absorption (SF) |
YTD Direct Net Absorption (SF) |
3Q26 Leasing Activity (SF) |
Average Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| Campbell | 754,873 | 0 | 2.6% | 2.6% | -1,734 | -11,448 | 4,758 | $2.26 |
| Cupertino | 148,371 | 0 | 0.0% | 0.0% | 0 | 0 | 0 | — |
| Fremont | 16,912,529 | 456,886 | 3.0% | 4.0% | 9,256 | 118,990 | 195,587 | $1.45 |
| Milpitas | 5,013,921 | 0 | 8.0% | 9.5% | -45,568 | -166,063 | 47,200 | $1.59 |
| Mountain View | 829,557 | 0 | 2.2% | 2.9% | 10,660 | 28,180 | 14,692 | $2.49 |
| Newark | 5,630,742 | 0 | 7.8% | 7.8% | -69,886 | -240,880 | 193,068 | $1.25 |
| Palo Alto | 574,631 | 0 | 5.3% | 5.3% | -20,171 | -5,590 | 0 | $3.84 |
| San Jose | 26,984,684 | 215,667 | 7.5% | 8.0% | 469,794 | 392,026 | 371,573 | $1.76 |
| Santa Clara | 5,898,902 | 0 | 2.1% | 2.1% | -28,067 | -5,748 | 17,140 | $1.99 |
| Sunnyvale | 1,975,080 | 0 | 12.5% | 18.9% | -5,270 | -165,853 | 121,127 | $2.92 |
| Silicon Valley Warehouse Total | 64,723,290 | 672,553 | 5.9% | 6.7% | 319,014 | -56,386 | 965,145 | $1.72 |
Data as of Q3 2026. Source: CoStar; EDD; BLS; Silicon Valley Business Journal. Prepared by the Kidder Mathews Research Group.
Significant Sale Transactions 3Q 2026
| Property | Submarket | SF | Sale Price | $/SF | Buyer | Seller |
|---|---|---|---|---|---|---|
| 48105 Warm Springs Blvd | Fremont | 375,200 | $120,000,000 | $319.83 | Wistron Corporation | Link Logistics Real Estate |
| 901-931 Cadillac Ct | Milpitas | 301,480 | $93,700,000 | $310.80 | Galvanize Real Estate | DRA Advisors |
| 45101-45169 Industrial Dr | Fremont | 198,676 | $61,400,000 | $309.05 | Bridge Logistics Properties | Link Logistics Real Estate |
| 1885 Las Plumas Ave | San Jose | 74,000 | $18,350,000 | $247.97 | Lift Partners | Freeland Foods, Inc. |
| 4019 Transport St | Palo Alto | 11,185 | $5,400,000 | $482.79 | Presidio Bay Ventures | Chawla Ventures, LLC |
Significant Lease Transactions 3Q 2026
| Property | Submarket | SF | Transaction Date | Landlord | Tenant | Lease Type |
|---|---|---|---|---|---|---|
| 8311 Central Ave | Newark | 198,768 | September 2026 | Prologis, Inc. | Quanta | New Lease |
| 935 McLaughlin Ave | San Jose | 194,536 | August 2026 | Lendlease R.E. Investments | Legacy Transportation Services | Renewal |
| 48688 Fremont Boulevard | Fremont | 174,578 | August 2026 | Crossing 880 Industrial, LLC | Wismettac Asian Foods | New Lease |
| 745-755 Sycamore Dr | Milpitas | 107,350 | July 2026 | Milpitas Oak Creek Delaware | Cisco | Renewal |
| 48888 Fremont Blvd | Fremont | 102,919 | August 2026 | BlackRock Realty | Apple, Inc. | Renewal |
Significant Under Construction
| Property | City | SF | Delivery Date | Owner |
|---|---|---|---|---|
| Campus @ Bayside | Fremont | 464,267 | October 2026 | Clarion Partners |
| 550 E. Brokaw Rd | San Jose | 333,400 | December 2027 | SuperMicro |
| 4553 & 4563 N First St | San Jose | 215,667 | May 2027 | Second Harvest of Silicon Valley |
| 46885 Bayside Parkway | Fremont | 203,414 | September 2027 | Prologis, Inc. |
| 3065 Bowers Ave | Santa Clara | 107,000 | June 2027 | Intel Corporation |
Data as of Q3 2026. Source: CoStar; EDD; BLS; Silicon Valley Business Journal. Prepared by the Kidder Mathews Research Group.
ContactGARY BARAGONA |
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