Silicon Valley’s office/R&D markets off to slow start in 2019 but demand strong and large transactions coming

Cushman & Wakefield’s latest market reported for Silicon Valley’s Office and R&D sectors revealed a sluggish start to 2019, after having combined for a robust 2.85 million square feet (msf) of occupancy growth in 2018 — largely stemming from the office sector. While the office market did continue its growth trend reporting another 269,000 square feet of positive net absorption in the first quarter, the R&D sector finished with a negative 265,000 square feet, leading to a virtual wash between the two sectors. Notably, both sectors maintain very healthy single-digit vacancies coupled with rent growth, while demand remains strong.

“Historically, the early part of the year can start slow in the Silicon Valley commercial real estate market and that is exactly what happened in 2019,” said Julie Leiker, Cushman & Wakefield’s market director for Silicon Valley.