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Silicon Valley Office Market Report

4th Quarter 2021

Posted In — Market Research | Market Report

MARKET DRIVERS

ASKING lease rates dropped 2.1% year-over-year (YOY) to $4.76/SF full service.

SALES volume gained 43.4% YOY from 4.1 million SF in 2020 to 5.8 million SF in 2021.

GROSS absorption rose 34.0% YOY from 4.8 million SF in 2020 to 6.5 million SF in 2021. Sunnyvale and Santa Clara were the most active markets with 1.8 million SF and 1.3 million SF respectively.

VACANCY rates grew 9.2% YOY from 11.5% in 2020 to 12.6% in 2021.

NET ABSORPTION for 2021 was 1.93 million SF, buoyed by 1.89 million SF of net absorption during 4Q 2021.

ECONOMIC OVERVIEW

UNEMPLOYMENT in California stood at 5.4% for California. Santa Clara County recorded an unemployment rate of 3.2% during this period.

THE CIVILIAN labor force for the San Jose-Sunnyvale-Santa Clara MSA grew 2.7% YOY to 1.07 million workers. The professional and business sector gained 5.7% YOY to 252,100 jobs.

NEAR-TERM OUTLOOK

INVESTORS looking for safe returns help drive sales demand upwards as Silicon Valley’s concentration of high-tech companies represent an island of stability amidst a choppy economic climate.

TENANTS are gradually returning to the office while gauging the impact of the new omicron variant. Companies continue using short-term renewals and remote work options to fulfill office requirements.

DATA SOURCE: COSTAR; STATE OF CALIFORNIA EMPLOYMENT DEVELOPMENT DEPARTMENT

 
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