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Silicon Valley Market Reports

Silicon Valley Office Market

Average FS Asking Rent (Price/SF)     
        $4.17
Availability Rate (%)           3.1%
Net Absorption (SF) 2,156,491

In the third quarter of 2018 the Silicon Valley office market couldn't quite match the productivity of the previous quarter. However, leasing activity remained strong as we also saw investment activity begin to pick up. As large tech companies continue to look for blocks of space throughout the South Bay, investors are seeing large office developments increase in value. As a result, despite some decline, net absorption remained in positive territory for a fourth straight quarter at 572,596 square feet, driven largely by strong activity in the San Jose Class A market. This brings year-to-date net absorption to positive 2,287,682 square feet. Availability throughout the South Bay increased by 0.2 percentage points to 12.2% overall, while average asking rates bounced back, increasing by $0.13/SF to $4.25/SF.

Silicon Valley Industrial/Warehouse Market

Industrial

Average NNN Asking Rent (Price/SF)      
      $1.46 
Availability Rate (%)         2.3%
Net Absorption (SF)   437,850

Warehouse

Average NNN Asking Rent (Price/SF)            $.98
Availability Rate (%)           5.8%
Net Absorption (SF)    -884,555

The Silicon Valley Industrial market bounced back from its third quarter lows, posting positive 437,850 square feet of net absorption. Despite the lack of space available overall, a few large deals pushed the market back into positive territory. As a result, availability fell by 0.8 percentage points to 2.3%. For the eighth quarter in a row, the lack of space has pushed up asking rates, which increased $0.15/SF over the previous quarter to end the year at $1.46/SF. Once again, larger tenants are left waiting for new projects to deliver product in the coming quarters to satisfy demand.

The warehouse market declined in the fourth quarter of 2018, posting negative 884,555 square feet of net absorption as the 814,852-square-foot Pacific Commons Industrial Center came available this quarter. This large influx of available space led to an expansion in the market by 2.3 percentage points to 5.8% overall. Average asking rates stayed the same at $0.98/SF, although we can expect an increase as new warehouse product is brought to market in the coming quarters.

Silicon Valley R&D Market

Average NNN Asking Rent (Price/SF)       $2.17
Availability Rate (%)         9.7%
Net Absorption (SF)   479,509

The Silicon Valley R&D market ended 2018 on a high note, with positive net absorption for the fourth quarter totaling 479,509 square feet. This was the market's first quarter of positive net absorption since the first quarter of 2015. Two large owner-user purchases by Google contributed significantly to this quarter's absorption. Vacancy for the market decreased 0.6 percentage points to 9.8% overall, while asking rates ticked up $0.07/SF to $2.17/SF on average.



Silicon Valley Office Market Report
4Q18
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Silicon Valley R&D Market Report
4Q18
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Silicon Valley Industrial Market Report
4Q18
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