Q2 2019 Silicon Valley Research and Development Report

Following a slow start to 2019, occupancy has begun to surge in Silicon Valley’s R&D market. The asking rates are strong and steady while availability is starting to decrease. Net absorption finished Q2 at 1.2 Million square feet. This brings the mid-year 2019 number to 917,000 sf which is more than double the full-year 2018 absorption number. The average asking rate has remained steady since the last quarter. The driving factor of this rate is the Northern Silicon Valley cities of Palo Alto, Menlo Park, and Mountain View who are posting extremely high rents to counterbalance the lower rents from Fremont and Milpitas. Looking forward, technology tenants will continue to lead the growth in both leasing and user purchases. With the pool of tenants competing for space, one can expect to see more and more preleasing occurring in the market for the remainder of the year.