MARKET DRIVERS
ASKING LEASE RATES rose 8.8% year-over-year (YOY) from $2.61/SF NNN in 3Q 2020 to $2.84/SF NNN in 3Q 2021.
NET ABSORPTION rose to 414,771 SF for 3Q 2021. Year-to-date (YTD) net absorption is negative 1.1 million SF.
R&D VACANCY RATE increased 20% YOY from 8.8% in 3Q 2020 to 10.6% in 3Q 2021. The vacancy rate in Fremont decreased 9.0% YOY from 8.2% in 3Q 2020 to 7.5% in 3Q 2021. The vacancy rate in San Jose increased 22.5% YOY from 10.3% in 3Q 2020 to 12.7% in 3Q 2021.
SALES VOLUME increased 54.9% YOY from 963,720 SF in 2Q20 to 1.49 million in 2Q21. San Jose and Fremont were the most active markets for the year with 623,915 SF and 409,168 SF respectively.
SALES VOLUME increased 88.9% YOY from 986,515 SF in 3Q 2020 to 1.9 million in 3Q 2021.
ECONOMIC REVIEW
COMPUTER and Electronic Manufacturing jobs for the San Jose-Sunnyvale-Santa Clara MSA gained 1.1% YOY to 122,000.
UNEMPLOYMENT in California stood at 7.5% for August 2021. Santa Clara County recorded an unemployment rate of 4.8% during this period.
NEAR TERM OUTLOOK
HIGH SALES VOLUMES signal large demands for R&D properties as investors queue up for an economic recovery post pandemic.
CONVERSIONS to life science properties increase as owners chase potential higher rents and space requirements for biotech and life science companies.
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