Companies across Silicon Valley are closing their offices.
The tech hub’s office vacancy rate rose to 17% in June from 11% in 2019. The Wall Street Journal reportsciting data from CoStar.
In some towns, such as Menlo Park and Mountain View, rates climbed above 20% this spring.
While office oversupply levels are lower than in San Francisco (estimated to be as high as 33%), analysts and investors expect Silicon Valley to close the gap as Technology companies lay off workers And empty the floors you don’t need.
“There’s not a lot of demand for technology in the market today,” Boston Properties president Douglas Linde said on the company’s earnings call in April.
Leasing activity in the office building his firm is developing in San Jose is virtually non-existent. “There were no conversations going on there,” he said by phone.
Offices in Silicon Valley cities from San Jose to Sunnyvale are dominated by big tech companies such as Google, Meta and Apple, which almost never lay off workers even in tight markets.
But Google has raised eyebrows in San Jose this year when it sealed off its Downtown West, an 80-acre transit retail village planned for as many as 25,000 employees.
Although big tech companies such as Amazon and Google have asked employees to return to the office at least part of the time, back-to-office policies have not stopped companies from reducing office floor space.
Office space available for sublease in Silicon Valley hit a record 7.6 million square feet, up from 2.7 million square feet in 2019, according to CoStar.
In May, Google listed for sublease the remaining 1.4 million square feet of office space in Mountain View and Sunnyvale.
Meta, the parent company of Facebook, recently listed an additional 700,000 square feet in connection with the closing of its Sunnyvale office, according to brokers.
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According to Kastle Systems, which tracks secure card swipes, Silicon Valley now has one of the lowest rates of returning to the office. In the first week of June, San Jose’s return rate was 39% of the pre-pandemic level, the lowest of the 10 cities Kastle tracked. The average is 50%.
Vacancy on Sand Hill Road, one of the most expensive addresses for venture capital firms globally, has more than tripled since 2019 to 14%, according to CBRE. One of the largest Andreessen Horowitz funds said the firm operates “primarily virtually.”
— Dana Bartholomew
