Technology Sector Pushes Silicon Valley Commercial Property to New Frontiers
Fueled by local technology growth, commercial real estate activity gained momentum in the fourth quarter, and as a result, annual absorption eclipsed 2017 activity. According to California’s Employment Development Department (EDD), the unemployment rate in Santa Clara County declined quarter over quarter to 2.4 percent. California, whose gross domestic product has surpassed that of the United Kingdom, has become the world’s fifth largest economy, driven by Silicon Valley’s thriving technology sector. Adding to the optimism, the Golden State’s unemployment rate stands at 4.1 percent, the lowest since EDD started tracking the metric in 1976.
Despite the rising cost of living and worsening traffic, Silicon Valley remains a sought after market for corporations, investors and developers alike. The Valley is home to a diverse community of technology and data science professionals. This hard to find talent pool is the impetus driving the aggressive expansion by the Valley’s heavy hitters. Big technology firms are often partnering with developers to build their new campuses and in some cases, such as Google, purchasing raw land directly from municipalities, as seen in Downtown San Jose.
The outlook for Silicon Valley is that of caution. Stock market shake ups, uncertainty with China, and labor uncertainty as a result of the tightening of the H-1B work visa program, may slow down the Valley’s economy. The good news is with the availability and vacancy at near-record lows, the Valley does not face a supply problem. Furthermore, a record-breaking $64 billion in venture capital invested in Bay Area startups in 2018 is a strong signal of the Valley’s strength.
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