Coronavirus economy: Weakness appears in Silicon Valley office market
- Shidonna Raven
- Jun 2
- 2 min read
By George Avalos
Apr 22, 205
Source: Silicon Valley
Photo / Image Source: Unsplash,
SAN JOSE — Silicon Valley office vacancies have begun to increase since the advent of coronavirus-linked business shutdowns as tenants exit spaces or offer subleases for sites they rent, a Colliers International snapshot of the local market shows.
Since March 2020, the month when state and local government agencies began to impose business shutdowns, 99 sublease spaces have come on the market in Silicon Valley, according to the assessment of the Silicon Valley market by Colliers, a commercial real estate firm.
“Silicon Valley, compared to markets such as San Francisco is holding steady,” said Shane Minnis, a vice president in the Colliers San Jose office. “Both the sublease space and directly available office are steadily increasing.”
At the start of August, total office vacancies in Silicon Valley were at 11.1 percent, up slightly from 10.9 percent on July 1, and up from 9.9 percent reported on March 1, which was just before the business shutdowns began.
Similarly, research and development spaces were at an 11.1 percent vacancy rate in early August, up from 10.6 percent on July 1, and up from 9.5 percent on March 1 in Silicon Valley, according to the snapshot, which was prepared by Colliers senior research manager Lena Tutko.
An estimated 8.74 million square feet of Silicon Valley office space was vacant and available directly from property owners on Aug. 1, up from 8.7 million on July 1, and 8.11 million on March 1, Colliers reported. That’s a 7.8 percent increase in the amount of office space that’s empty and available for rent.
About 3.04 million square feet of office space was available through sublease from tenants in Silicon Valley as of Aug. 1. That was an increase from 2.82 million in sublease space on July 1 and 2.36 million on March 1.
The August sublease numbers for Silicon Valley office space represent a hefty 28.8 percent increase in the amount of sublease space that’s become available in the wake of the coronavirus-related shutdowns.
Of the 99 sublease office spaces that have appeared on the market since March, 47 are 5,000 square feet or less in size. Five are 50,000 square feet or more in size, Colliers determined.
Overall, however, Silicon Valley is expected to weather the economic storms that the coronavirus has unleashed, primarily due to the area’s sturdy job market and the region’s status as the world’s leading tech hub.
“Silicon Valley is still a strong market,” Minnis said. “The tech and innovation sectors, along with medical devices and those types of industries, are still steady and still strong even in today’s environment.”
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