Silicon Valley Leasing Activity Returns Despite Increased Vacancy
Silicon Valley’s commercial property markets are continuing to adapt to a post-COVID-19 economy. For the third consecutive quarter occupancy losses amounted to 2.1 million square feet and more than 4.5 million square feet year-to-date, wiping out all occupancy gains seen in 2019. The bulk of the negative net absorption can be ascribed to the R&D sector, which led in occupancy losses with 1.9 million square feet. Roughly 25.0 percent of these occupancy losses stem from renovation projects, which are temporary in nature and signal confidence in future demand. Despite the continued upward trajectory in vacancy, gross absorption, which is defined as non-renewal leasing and user-sale activity, rebounded to 4.1 million square feet, up 64.5 percent from Q2 2020 but down 16.5 percent year-over-year.
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