Boom in Commercial Real Estate Hits Silicon Valley

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The Silicon Valley area is no stranger to growth. However, a recovering economy and a booming tech sector has led to steady grown in commercial real estate in Silicon Valley. According to a new report by Colliers International, decreasing vacancies and improving rents are the key statistics that demonstrate the accelerating grown  in the area.

In its recent Colliers Real Estate Trends 2019 Conference in March, Colliers reported that by the end of 2018, office vacancies were at the lowest point they have been since 2015. Vacancies were 6.6% in 2018, as opposed to 6.2% in 2015.

Office rents are also the highest they have been in a decade, due to decreasing vacancy rants and increasing demand. According to Colliers statistics, the average rent for office space, at $4.40/sq foot, is the highest it’s been since they started compiling data back in 2008. The average rent on critical research and development space is $2.28/sq ft, which also represents the highest point in a decade.

Image via PXHere (CC BY 2.0)

Industry titans such as Apple, Google, and Facebook and been gobbling up office and R&D space, so much so that 78.8% of the anticipated new office space is already pre-leased. That’s roughly 5.3 million sq ft of office space that is still under construction.

The mass exodus that was expected as real estate costs skyrocketed and remained in orbit has not really materialized. While some companies have relocated to more cost effective locales, technology firms have dug in and committed significant resources to maintaining an active presence in Silicon Valley. For instance, San Jose is currently experiencing a Renaissance, due to Google’s much anticipated transit village, right in the heart of San Jose. Google and other firms hoping to cash in on the development are on a spending spree to gobble up property in and around the Diridon Station area. Google alone has reportedly committed $310 million to buy the full spectrum of property types, from residential to commercial, in the village area.

Read more at Mercury News.

Keystone Commercial Brokerage serves the needs of commercial real estate investors in the Santa Clara and San Mateo counties, specializing in commercial property, multi-unit residential, office space, and multi-use property. Paul Phangureh has over 16 years of experience in buying and selling in the Santa Clara and San Mateo County areas. Contact Paul at 650-924-2544, or email at paul@keystonebrokerage.com.

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