Q3 2023 Silicon Valley Office Occupiers Guide
The Silicon Valley office market remained stagnant in Q3. Vacancy recorded a 0.5% increase in the quarter, to 15.2% overall. Average market rents remained flat QoQ, registering $5.44 PSF/Month. The market recorded 238.9K SF of negative net absorption, an improvement from the 2.2M SF of negative net absorption recorded last quarter. Notably, ServiceNow, Apple, and Tesla moved into large blocks in Santa Clara and Palo Alto, contributing to 823.0K SF of gross absorption. It’s worth noting that ServiceNow and Apple moved into newly constructed buildings, distinct from the lease renewals signed this quarter at 2251 Lawson Lane and 10100 N Tantau Avenue.
For the third straight Labor Day, employers made a push for employees to return to the office. Kastle Systems data indicates there was a 4.2% jump in office utilization in the San Jose Metro Area post-Labor Day, a pattern recorded over the past 3 years. At a company-organized block party; Google announced its commitment to San Jose while updating its return-to-office (RTO) policy to three days a week with badge monitoring. Other major companies that have also announced updated RTO strategies include Amazon, Meta, and even Zoom. The gradual shift to maintaining physical offices, along with adaptive strategies being employed, signals a subtle stabilization to the Silicon Valley office market.