The Valley Reaches New Peaks
The first half of 2018 has come to a close and the Silicon Valley economy is firing on all cylinders. According to the State of California Employment Development department, Santa Clara County’s unemployment rate is now at 2.3 percent.
The uptick in employment can be attributed to key technology companies strategically expanding their foothold in the Silicon Valley. The Valley’s unique ecosystem, fostering a culture of progress and innovation, coupled with an unrivaled pool of tech talent, continues to drive commercial real estate demand. Despite major challenges such as lack of affordable housing, outdated infrastructure, and a potential city “head tax” on large employers in tech-saturated cities like Mountain View and Sunnyvale, there is no sign of slowdown from both occupiers and developers alike..
Silicon Valley’s commercial property market saw unprecedented volumes of leasing activity in the second quarter, with gross absorption reaching 8.94 million square feet, up 69.5 percent from the previous quarter and up 17.6 percent from Q2 2017. Furthermore, the Valley experienced a positive 3.75 million square feet of net absorption, up 128.3 percent from the previous quarter and up 38.9 percent from the same period last year. Roughly half of the activity came in June, boosted by Facebook’s 750,000-square-foot deal at Ardenwood Corporate Park in Fremont, which also happened to be the largest deal of the quarter.
The total availability across all product types sits at 30.2 million square feet while vacant space is at 18.3 million square feet, translating to an overall availability rate of 8.5 percent, and vacancy rate of 5.2 percent.
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