Silicon Valley Office Market Report

The following reflects Silicon Valley office market conditions as of 3Q 2026.

MARKET DRIVERS

Silicon Valley’s office vacancy rate fell to 15.9% in 3Q26, down 30 basis points from the prior quarter and 160 basis points year-over-year, while total availability declined to 16.3%, a 30-bps quarterly drop and 190 bps below year-ago levels. Leasing activity totaled 2.9M SF for the quarter, roughly flat with 2Q26 but up 97.2% from the 1.5M SF recorded in 3Q25, bringing year-to-date leasing to 8.9M SF, 70.7% ahead of the same point in 2025. Net absorption came in positive at 491.1K SF for the quarter, marking the fourth consecutive quarter of gains and lifting year-to-date absorption to 1.2M SF, a sharp reversal from negative 1.6M SF through the same period last year.

Office investment sales reached 1.1M SF across 12 transactions in 3Q26, bringing year-to-date sales volume to 4.4M SF, still 32.3% below last year’s pace. Quarterly dollar volume totaled $374.6M, with average pricing rising to roughly $342 PSF from about $293 PSF in 3Q25. The largest transactions of the quarter were concentrated in Mountain View, Sunnyvale, and Santa Clara, pointing to capital that remains active but selective.

ECONOMIC REVIEW

Santa Clara County’s unemployment rate stood at 4.1% in July 2026, below California’s seasonally adjusted statewide rate of 5.1%. Although the county rate ticked up from spring lows, the region’s technology-driven labor market continues to outperform the state overall.

The San Jose-Sunnyvale-Santa Clara MSA reported approximately 1.176M nonfarm jobs in July 2026, up 1.3% year-over-year. Information sector employment reached 98.6K jobs, up 0.5% YOY, while Professional & Business Services employment totaled 279.2K jobs, down 0.4% YOY. The mixed sector performance suggests office demand gains remain concentrated among larger technology and growth-oriented users rather than reflecting broad-based hiring.

NEAR-TERM OUTLOOK

Silicon Valley’s office recovery continued through 3Q26, with both vacancy and availability declining from the prior quarter and positive absorption extending to a fourth consecutive quarter. Quarterly leasing held near 2Q26’s strong pace and nearly doubled year-over-year, pushing year-to-date activity 70.7% above 2025 levels. Demand remains concentrated among a relatively small number of large commitments: Google recommitted to approximately 2.1M SF across Moffett Place and Moffett Gateway in Sunnyvale, while Amazon leased roughly 318.3K SF at 1000 Enterprise Way in Moffett Towers. More recent activity points in the same direction, with Google reportedly nearing a 156.5K SF lease near its Mountain View headquarters and OpenAI exploring an additional 300K to 400K SF in Mountain View, though neither had been finalized as of mid-September.

Supply remains constrained, with no new deliveries in 3Q26 and only about 60.2K SF under construction, down 88.2% year-over-year. Limited new inventory could support further tightening if large technology and AI-related users keep absorbing space. Capital markets remain more uneven — sales volume fell sharply from last year even as average pricing improved — suggesting transaction activity is still selective and concentrated in assets where buyers see durable long-term demand. The pace of further improvement will depend on whether recent large commitments broaden into stronger leasing demand across smaller and older office properties.

Frequently Asked Questions

What is the office vacancy rate in Silicon Valley in 3Q 2026?

The Silicon Valley office vacancy rate was 15.9% in 3Q 2026, down 30 basis points from 16.2% in 2Q26 and down 160 basis points from 17.5% in 3Q25, according to Kidder Mathews research. The decline marks a continuation of the gradual tightening seen over the past several quarters. (Data source: CoStar)

What is the total office availability rate in Silicon Valley?

Total availability in the Silicon Valley office market was 16.3% in 3Q 2026, down 30 basis points quarter-over-quarter and 190 basis points year-over-year from 18.2% in 3Q25, according to Kidder Mathews research. Availability measures space marketed for lease, including space that is currently occupied but being offered for sublease or future vacancy.

How much office leasing activity occurred in Silicon Valley in Q3 2026?

Silicon Valley office leasing activity totaled 2.9M SF in 3Q 2026, up 97.2% from the 1.5M SF recorded in 3Q25 (Data source: CoStar). Year-to-date leasing activity through the third quarter reached 8.9M SF, 70.7% above the same point in 2025.

What was Silicon Valley’s office net absorption in 3Q 2026?

Silicon Valley office net absorption was positive 491,072 SF in 3Q 2026, according to Kidder Mathews research. Net absorption measures the net change in occupied space, and this marked the fourth consecutive quarter of positive absorption, bringing year-to-date absorption to roughly 1.2M SF compared with negative 1.55M SF through the same point in 2025.

What are average asking office rents in Silicon Valley, and how do they vary by submarket?

The average asking office rental rate in Silicon Valley was $4.98 per square foot per month (FSG) in 3Q 2026, up 2.7% from $4.85 in 3Q25 (Data source: CoStar). Submarket rates ranged from a low of $2.86 in Milpitas to a high of $7.50 in Palo Alto, with Mountain View also commanding a premium rate of $6.99.

How much office space is under construction in Silicon Valley?

Approximately 60,188 SF of office space was under construction in Silicon Valley as of 3Q 2026, down 88.2% from 508,472 SF a year earlier, according to Kidder Mathews research. The only significant project tracked was 2525 Park Blvd in Palo Alto, owned by The Douglas Living Trust and slated for delivery in January 2027. No new office space was delivered during the quarter.

What was the largest office sale transaction in Silicon Valley in Q3 2026?

The largest office sale in Silicon Valley in 3Q 2026 was 400 Castro St in Mountain View, a 150,416-SF building that sold for $121.5 million, or $807.76 per square foot, according to Kidder Mathews research. Spear Street Capital acquired the property from Tishman Speyer. Overall, office investment sales totaled 1.1M SF across 12 transactions in the quarter.

What was the largest office lease transaction in Silicon Valley in Q3 2026?

The largest office lease commitment in Silicon Valley in 3Q 2026 was Google’s approximately 2.1M SF recommitment across Moffett Place and Moffett Gateway in Sunnyvale (Data source: CoStar). Amazon also signed a notable direct lease for roughly 318,255 SF at 1000 Enterprise Way in Moffett Towers, also in Sunnyvale.

What is the outlook for the Silicon Valley office market?

The Silicon Valley office market is positioned for continued gradual stabilization, with vacancy and availability both declining and net absorption positive for a fourth straight quarter, according to Kidder Mathews research. Limited new supply, combined with continued space absorption by large technology and AI-related users, could support further tightening, though the pace of broader improvement will depend on whether large commitments extend to smaller and older office properties.

Last updated: 3Q 2026. Data source: CoStar, EDD, U.S. Bureau of Labor Statistics, Silicon Valley Business Journal. Compiled by the Kidder Mathews Research Group.

3Q 2026 Silicon Valley Office Market: Key Data Points

Explore our full Silicon Valley office market review for deeper insights into leasing trends, sale activity, and submarket performance.

• Vacancy declined for a fourth straight quarter: Total vacancy fell to 15.9% in 3Q26, down 30 bps QOQ and 160 bps YOY, while total availability dropped to 16.3%.
• Leasing activity nearly doubled year-over-year: 3Q26 leasing totaled 2.9M SF, up 97.2% from 3Q25, bringing year-to-date leasing to 8.9M SF, 70.7% above the same point last year.
• Net absorption stayed positive for a fourth consecutive quarter: 3Q26 net absorption totaled 491,072 SF, lifting year-to-date absorption to roughly 1.2M SF versus negative 1.55M SF through 3Q25.
• Asking rents ticked up: The average asking rate reached $4.98/SF/mo FSG, up 2.7% YOY, with submarket rates ranging from $2.86 in Milpitas to $7.50 in Palo Alto.
• Investment sales remained selective: 3Q26 sales volume totaled 1.1M SF across 12 transactions for $374.6M, with average pricing rising to roughly $342 PSF from about $293 PSF a year earlier; year-to-date volume remains 32.3% below last year.
• New supply stayed limited: No office space delivered in 3Q26, and only about 60,188 SF remained under construction, down 88.2% year-over-year.

Submarket Statistics

Significant Sale Transactions 3Q 2026

Significant Lease Transactions 3Q 2026

Significant Under Construction