Silicon Valley - San Francisco Peninsula office market reports

Q4 2025

Business office people
1.33 msf

Leasing activity declines as tenant makeup in the market shifts

Leasing activity across the SF Peninsula and Silicon Valley fell 30.3% quarter-over-quarter, with Silicon Valley down 33% QoQ but up 9% year-over-year as AI companies offset downsizing by other tech firms. The Peninsula continued to lag, posting a 17% QoQ and 35.7% YoY decline, though several notable AI leases in Q4 may point to improved momentum heading into 2026.

74.7% sf

Peninsula tenants seek class A space as asking rents decrease

Tenants are capitalizing on lower Class A asking rents on the SF Peninsula, which have fallen more than $7 psf from their 2022 peak, driving leasing activity in premium buildings led by several AI firms. As demand concentrates in higher-quality space, Class B and C buildings have fallen to just 25.3% of total leasing—near their lowest share since Q4 2022—highlighting the need for landlords to invest in upgrades to remain competitive.
$4.79 sf

SF Peninsula and Silicon Valley asking rents contrast as availability shifts 

Diverging availability trends across Silicon Valley and the SF Peninsula have driven opposite rent movements. Silicon Valley saw steadily rising asking rents in the second half of 2025 as availability declined, while the SF Peninsula experienced falling rents amid weaker tenant demand. This divergence may create favorable conditions in 2026 for tenants seeking more affordable space near San Francisco on the SF Peninsula.

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Explore different topics like the latest office market pricing trends and analysis of San Jose - Silicon Valley's current office real estate market conditions. Gain a better understanding of San Jose - Silicon Valley’s office real estate outlook and stay ahead of current office space trends. Make smart decisions when it comes to investing in office properties in San Jose - Silicon Valley's competitive office real estate market. Avison Young is your trusted source for commercial real estate office market insights in San Jose - Silicon Valley.

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