Q3 2023 Silicon Valley R&D Report
The Silicon Valley R&D sector is still working to find its footing in Q3. The vacancy rate remained relatively unchanged quarter-over-quarter (QoQ), showing a slight increase of 0.04% to 7.64%. Meanwhile, rental rates inched up by $0.08 to reach $2.89 PSF/Month. Net absorption was negative again this quarter at 259.49K SF. This marks the 3rd quarter in a row with negative net absorption. When comparing 2022 YTD absorption through the first three quarters, the R&D market recorded 2.55MSF of positive net absorption. In 2023, the R&D market has recorded 892.64K SF of negative net absorption over the same period.
One bright spot this quarter was Western Digital’s sale lease-back agreement. The company sold and leased back 580.3K SF at 901 - 1101 Sandisk Dr. in Milpitas. Santa Clara, Sunnyvale, and the West Valley were the only submarkets that had positive net absorption this quarter, albeit marginal. With over 8.0M SF of unoccupied space throughout the Valley, keep an eye on excess market supply as R&D tenants with flexible infrastructure and power requirements can find unique tenant- favorable opportunities.