SAN JOSE – Silicon Valley tech companies have contributed to the recovery of office property in the Bay Area and across the country, which indicates a recovery in commercial real estate from coronavirus-related illnesses, a new report said.
Office rental activity in both Silicon Valley and San Francisco skyrocketed during the first nine months of 2021 compared to the same period in 2020, and is growing much faster than office rentals nationwide, according to researchers at CBRE, a firm on commercial real estate.
Evidence of technical-led office rebuilding is contained in the CBRE’s annual Tech-30 report.
“Bay Area companies are ramping up their office leases both locally and nationally to accommodate the increase in recruitment,” said Colin Yasukochi, executive director of the CBRE Technical Research Center.
In Silicon Valley, defined as Santa Clara and San Mateo counties, office rental activity in the first nine months of 2021 soared 44% over the same period in 2020, according to a CBRE study.
In San Francisco, office rents jumped 45% in the first nine months of 2021 from the same period a year earlier.
In the same period of this year, office rentals across the country grew 7.5% over the same nine months in 2021, according to CBRE.
One of the reasons that office rental activity is so much higher in tech regions such as Silicon Valley and San Francisco is that tech companies are hiring employees at a relatively high rate compared to non-tech employers.
“Technology companies continue to grow,” Yasukochi said. “National employment in high technology is now higher than it was before the pandemic.”
Major leasing deals in the first nine months of 2021 in Silicon Valley include:
“Apple leased approximately 700,000 square feet in the Pathline Business Park in Sunnyvale.
NetApp leased 301,000 square feet on 700 Santana Row in San Jose.
Tesla has leased at least 193,000 square feet and a whopping 325,000 square feet on Page Mill Road, Palo Alto.
In addition to leasing growth this year, large tech companies are planning a massive expansion in Silicon Valley.
Among high-profile projects:
– Google plans to create a mixed-use area on the western outskirts of downtown San Jose, where the search giant could hire up to 20,000 people. Google is also moving forward with major office centers in Sunnyvale and Mountain View.
“Apple is aiming to take over some existing buildings on the sprawling campus in northern San Jose, which is owned by the iPhone maker.
– Intuitive Surgical has proposed a two-building office and R&D facility on Kiefer Road, Sunnyvale, with a total area of approximately 1.21 million square feet.
“Adobe is in the final stages of building a new office tower that will create a fourth office tower that will significantly expand the tech titan’s headquarters campus of three buildings in downtown San Jose.
“The tech industry tends to lend itself to hybrid work, but it also values personal collaboration and innovation in the physical workplace,” said Todd Husack, managing director of CBRE Tech & Media. “We expect tech firms to take up more space in the Bay Area over time.”