Silicon Valley Experiences Boom in Commercial RE
A booming tech sector has led to steady grown in commercial real estate in Silicon Valley, as evidenced by decreasing vacancies and improving rents, according to a new report issued by Colliers International.
At its Colliers Real Estate Trends 2019 conference, held in San Jose last week, Colliers reported that by the end of 2018, office vacancies were at the lowest point they have been since 2015. In 2018, vacancies were 6.6%, as opposed to 6.2% in 2015.
With few vacancies and increasing demand, this has resulted in rising rents on office space, with the highest rent levels seen in a decade in 2018. According to Colliers statistics, $4.40/sq foot average rent for office space is the highest since they started compiling data back in 2008. The average rent on research and development space is also at a decade high of $2.28/sq ft.
Lead by leading industry heavy weights, such as Apple, Google, and Facebook, 78.8% of the anticipated new office space being completed in 2019 is already pre-leased. That’s roughly 5.3 million sq ft of office space that is not even completed yet.
While many companies have sought lower cost havens in other states, the entrenched technology firms are showing great commitment to remain an active presence in the Silicon Valley area. A particularly promising turn-around story is happening in San Jose, with Google at the heart of development interest, due to the much anticipated transit village in downtown San Jose. Google is on a spending spree, with a reported $310 million spent on purchasing the full spectrum of property types in the proposed transit village area.
There is a bright outlook for 2019, as interest in office and R&D space is expected to continue its upward trajectory. Keystone Commercial Brokerage serves the needs of commercial real estate investors in the Santa Clara and San Mateo counties, specializing in commercial property, multi-unit residential, office space, and multi-use property. Paul Phangureh has over 16 years of experience in buying and selling in the Santa Clara and San Mateo County areas. Contact Paul at 650-924-2544, or email at [email protected].