Quarterly Report

Silicon Valley Commercial Space

Q3 2018

The pace of new commercial development in Silicon Valley remains brisk, and competitive preleasing activity is keeping developers optimistic. More than three million square feet of newly constructed office and industrial space was delivered to the market in the first three quarters of 2018, a third of that total in Q3 alone. Ongoing demand for Class A space (especially in the technology and life science clusters) is expected to keep the pressure on average rental rates and continue to push leasing activity down the 101 corridor toward San Jose. While Silicon Valley’s industrial space vacancy rate is at an 18-year low, average office space vacancy across the region has risen dramatically this year despite low vacancy rates in prime submarkets such as Palo Alto, Redwood City, Menlo Park, Mountain View, and Sunnyvale.