Q2 2022 Silicon Valley Office Occupiers Guide
Silicon Valley’s office market closed out the first half of the year with strong leasing activity. This is a positive indicator as office users get closer to understanding their space requirements while incorporating flexible options into their real estate strategy. Despite strong leasing activity, overall vacancy increased 1.5% from last quarter due to larger submarkets in Silicon Valley. Specifically, North San Jose, West Valley, and Santa Clara recorded increases in vacancies. Some of the largest leases of the quarter were in the form of subleases. Pure Storage and Applied Materials took 577,250 square feet in Santa Clara, collectively.
Gross absorption, or the total amount of space a tenant physically moves into, has increased 45.5% quarter-over-quarter. Although still down 46.0% from pre-pandemic levels, activity has steadily increased in the past three quarters indicating a growing demand for office space. Looking ahead, as tenants continue to re-enter the physical office, expect more high-end subleases to occur as occupiers look to capture high end below-market deals in desirable submarkets.