San Jose Office Market Report

Market facing challenges with strong momentum. San Jose’s office sector saw its best quarter for net absorption since 2018 in the final three months of last year, dropping vacancy 100 basis points in that span to 18.7 percent. Vacant inventory decreased the most in Santa Clara, Palo Alto and the Mountain View-Los Altos area, with a more modest improvement in the Sunnyvale-Cupertino area. Late 2024 move-ins by TikTok, Industrious and software developer Omnissa added to the jump in occupied stock. That progress may be partially interrupted this year, however, amid headwinds in the technology sector. The number of local professional and business services-related jobs, as well as those in the information sector, were down last year by about 27,000 roles from the mid-2022 peak. Some staff count adjustments may continue this year, influencing immediate space needs. The second-most educated population nationally nevertheless provides a concentration of skilled labor likely to draw employers during the next expansion.