NET ABSORPTION dropped to negative 639,344 S.F. for 2020, breaking a ten year run of positive net absorption.
OFFICE AVAILABILITY increased 41.25% year-over-year in 2020 to 14.69%. Sublease availability rose 100 basis points YOY, standing at 3.4% at the end of 2020 for all class types.
GROSS ABSORPTION decreased 50% YOY from 9.2 million in 2019 to 4.5 million in 2020. San Jose and Santa Clara were the most active markets for the year with 977,920 s.f. and 1.2 million s.f. respectively. Sales volume has followed a similar trend, falling 45% YOY from 7.3 million in 2019 to 4.1 million in 2020.
THERE ARE currently 8.2 million s.f. of office development in the construction pipeline. Construction deliveries totaled 1.8 million for 2020. Notable completions for 2020 include 358,000 SF in Coleman Highline Buildings 3 & 4 in San Jose and 195,000 SF in Phase I of the Catalyst project in Sunnyvale.
COVID-19 caused multiple business closures and company layoffs in 2020. Surviving companies adapted by letting employees work remotely. The pandemic prompted restrictions on non-essential businesses and retail properties, sharply dropping economic activity in Silicon Valley. California unemployment stood at 7.9% at the end of 2020, with Santa Clara County reporting a 5.1% unemployment rate.
COVID-19 measures have tamped down office demand in 2021 as companies allow employees to work from home. Direct asking lease rates are expected to hold firm, while tenants can hunt for deals amongst the growing amount of sublease space. Short-term leases become common as companies gauge how quickly the economy returns to normal.