San Jose - Silicon Valley office market reports
Q2 2021: The tech industry’s lax return to office policies and flexible work from anywhere plans outweigh reopening efforts and higher regional vaccination rates in the Bay Area.
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Despite Bay Area-based companies beginning their workplace reopening efforts and significantly higher vaccination rates across the regional population, the Bay Area office market recovery continues to lag behind the national average. A high concentration of tech firms with flexible return to office plans is a large contributor to the less rapid rate of recovery the Bay area has experience thus far.
Historically tightened labor market conditions were halted by the pandemic with nearly 148,000 job losses between February and May 2020. However, reopening efforts have enabled unemployment to rebound 7.8% since May 2020 to 5.1% now.
Leasing activity has paused, decreasing by 44.4 percent compared with long-term historical averages.
While the Q2 2021 vacancy rate has reached a high for the last decade, it has not risen to the peaks of neither the financial crisis nor the dot com bubble.
Available sublease space continues to grow and has increased by 60% over the past 18 months, yet has not reached the highs of the burst of the dot com bubble.
Despite significant decreases in the volume of leases signed in the Silicon Valley, base rents stayed mostly stagnant throughout the pandemic, with average base rents decreasing by only $0.04 per sf from 2020 to 2021.
Pricing hit a temporary low of $434.15 psf at the height of the lockdowns in May 2020, but has increased every month since, now at $556.62 psf.
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