Q1 2026 Silicon Valley R&D Occupier's Guide
The Silicon Valley R&D market entered Q1 2026 with mixed fundamentals, however, performance continues to vary widely by asset quality. Vacancy declined for the second consecutive quarter to 9.6%, a modest 0.1% decrease quarter-over-quarter (QoQ), while remaining flat year-over-year (YoY). Availability fell to 12.1%, a 0.4% QoQ decline and 0.7% below the Q2 2025 peak of 12.8%. Average asking rates continue to trend downward, falling 3.6% QoQ and 7.2% YoY, with pricing largely driven by asset quality and power capacity. Net absorption remained negative during the quarter as R&D tenants take longer to physically move into their spaces, delaying when occupancy gains show up as positive absorption.
Despite elevated vacancy and overall negative absorption, the pace of decline has slowed and demand is becoming more targeted. Growth is increasingly concentrated among AI, semiconductor, and advanced manufacturing users, who are reshaping requirements around power and existing infrastructure. As a result, the market is seeing competition among highly specialized assets. Even with rising competition in select segments of the market, the Bay Area’s concentration of specialized space and talent positions Silicon Valley to remain a leading hub for AI innovation in the U.S.
Despite elevated vacancy and overall negative absorption, the pace of decline has slowed and demand is becoming more targeted. Growth is increasingly concentrated among AI, semiconductor, and advanced manufacturing users, who are reshaping requirements around power and existing infrastructure. As a result, the market is seeing competition among highly specialized assets. Even with rising competition in select segments of the market, the Bay Area’s concentration of specialized space and talent positions Silicon Valley to remain a leading hub for AI innovation in the U.S.