Q3 2023 Silicon Valley Office Market Report

The Silicon Valley office market was stagnant during the third quarter. Vacancy rates rose by 0.5 percent to 15.2 percent. Average rents remained flat recording $5.44 per square foot per month. The quarter saw 238,900 square feet of negative net absorption, a decrease from the previous quarter’s 2.2 million square feet. ServiceNow, Apple, and Tesla secured large spaces in Santa Clara and Palo Alto, accounting for 823,000 square feet of gross absorption. Without these major companies, the market would have seen over 1.0 million square feet of negative absorption.

For the third consecutive Labor Day, employers encouraged office returns. Data from Kastle Systems showed a 4.2 percent increase in office use in the San Jose Metro Area after Labor Day. This trend has been consistent for the last three years. Google reaffirmed its commitment to San Jose at a company block party and revised its return-to-office policy to three days a week, monitored by badges. Amazon, Meta, and Zoom have also updated their return-to-office strategies. These changes hint at a gradual stabilization in the Silicon Valley office scene.

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