Office buildings and gathering areas in Sunnyvale’s Pathline Park complex near the intersection of North Mary Avenue and Almanor Avenue, a campus where Apple has leased . Silicon Valley tech firms have buoyed an office market rebound in the Bay Area and nationwide, a trend that points to a commercial real estate recovery from coronavirus-linked slumps, a new report shows.
SAN JOSE — Silicon Valley tech firms have buoyed an office market rebound in the Bay Area and nationwide, a trend that points to a commercial real estate recovery from coronavirus-linked maladies, a new report shows.
Office leasing activity in both Silicon Valley and San Francisco has soared during the first nine months of 2021 compared with the same period in 2020 and is rising far more quickly than what’s the case for office leasing nationwide, reported researchers with CBRE, a commercial real estate firm.
The evidence of a tech-led office rebound is contained in the annual Tech-30 report issued by CBRE.
“Bay Area companies are ramping up their office leasing both locally and nationally to accommodate an increase in hiring,” said Colin Yasukochi, executive director of the tech insights center at CBRE.
In Silicon Valley, defined as Santa Clara County and San Mateo County office leasing activity over the first nine months of 2021 soared 44% higher compared with the same period in 2020, CBRE’s research determined.
In San Francisco, office leasing jumped 45% during the first nine months of 2021 compared with the similar period the year before.
Over the first nine months of 2021, office leasing nationwide was up 7.5% compared with the same nine months in 2021, CBRE reported.
One reason why office space leasing activity is far stronger in tech-dominated regions such as Silicon Valley and San Francisco is that tech companies are hiring at a relatively robust pace compared with non-tech employers.
“Tech companies continue to grow,” Yasukochi said. “National tech employment is now above pre-pandemic levels.”
Among the major leasing deals during the first nine months of 2021 in Silicon Valley:
— Apple leased about 700,000 square feet in Pathline Business Park in Sunnyvale.
— NetApp leased 301,000 square feet at 700 Santana Row in San Jose.
— Tesla has rented at least 193,000 square feet and as much as 325,000 square feet on Page Mill Road in Palo Alto.
In addition to the upswing in leasing activity this year, major tech companies are planning huge expansions in Silicon Valley.
Among the high-profile projects:
— Google is planning a mixed-use neighborhood on the western edges of downtown San Jose where the search giant could employ up to 20,000 people. Google also is pushing ahead with major office hubs in Sunnyvale and Mountain View.
— Apple is moving towards occupying some existing buildings on a vast north San Jose campus that the iPhone maker owns.
— Intuitive Surgical has proposed the development of a two-building office and research tech hub on Kifer Road in Sunnyvale that would total about 1.21 million square feet.
— Adobe is in the latter stages of constructing a new office tower that would create a fourth office tower to greatly expand the tech titan’s three-building headquarters campus in downtown San Jose.
“The tech industry is generally amenable to a hybrid work format, but it also values the in-person collaboration and innovation of a physical workplace,” said Todd Husak, managing director of CBRE’s Tech & Media practice. “We anticipate over time tech firms will occupy more space in the Bay Area.”
