San Jose - Silicon Valley industrial real estate market reports
Q3 2021: Due increases in demand and further expansion of
e-commerce, industrial leasing activity has seen varying levels of recovery.
In Q3 of 2021, the Northern California industrial markets are in varying states of recovery. In markets where the industrial sector plays a traditionally larger role in the economy, like the East Bay and Sacramento, market fundamentals have seen a steady rise since the beginning of the Covid-19 Pandemic. In markets where the industrial sector plays a traditionally smaller role in the economy, like the San Francisco Peninsula and Silicon Valley, market fundamentals have begun to rebound since the peak of the Covid-19 Pandemic.
The Silicon Valley Unemployment rate continues to decline from a high of 12.4% in April to 4.9% now.
Leasing has increased since the peak of the Covid-19 pandemic, with 2021 totals expected to surpass 2020 totals by 4.5%.
The Q3 2021 total vacancy rate has continued a slight uptick, increasing to 4.5% from a 2019 low of 3.9%. Average asking rents have increased 8.4% over that same time period, underscoring how industrial demand has outstripped supply in the Silicon Valley.
Base rents have softened slightly in the third quarter, but overall have trended upward since 2015, increasing by 49.1% over the last six years.
During Q3 2021, over $800 million of deals were completed, making the total deal volume since the beginning of 2020 $4.3 billion.
The Bay Area currently has 4.8M sf of industrial space proposed or under construction, which makes up 2.9% of the current total inventory in the regions.
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