Q1 2026 Silicon Valley Office Occupier's Guide
The Silicon Valley office market posted a strong start to the year. Vacancy declined for the fourth consecutive quarter, falling to 16.0%, down 1.1% quarter-over-quarter and (QoQ) 1.4% year-over-year (YoY). Availability also tightened, decreasing 1.3% from the prior quarter to 18.6%, its lowest level since Q2 2023. After rising for four straight quarters, average asking rents held flat at $5.14 psf. Net absorption remained positive, totaling 179K SF for the quarter and marking five consecutive quarters of positive absorption.
The cautious optimism seen in 2025 has translated into several quarters of positive momentum, highlighted by a surge in leasing activity to start the year. AI and AI-related firms continue to be primary drivers of demand and leasing activity. For example, OpenAI leased over 440K SF in Mountain View. The AI ecosystem is supported by the concentration of AI talent in the Bay Area which is translating into increased office leasing as companies scale headcount and expand operations. Silicon Valley, along with neighboring San Francisco, remains well positioned to capture this growth, reinforcing its role as a leading hub for AI-driven office demand in the U.S.
The cautious optimism seen in 2025 has translated into several quarters of positive momentum, highlighted by a surge in leasing activity to start the year. AI and AI-related firms continue to be primary drivers of demand and leasing activity. For example, OpenAI leased over 440K SF in Mountain View. The AI ecosystem is supported by the concentration of AI talent in the Bay Area which is translating into increased office leasing as companies scale headcount and expand operations. Silicon Valley, along with neighboring San Francisco, remains well positioned to capture this growth, reinforcing its role as a leading hub for AI-driven office demand in the U.S.