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Market Report

San Jose Office Market Report

4Q 2023

Demand Apparent for Lower Rent Options, but Record
Available Sublease Space Poses Challenge

Impact of big tech layoffs evident. After rising by just 80 basis points during the preceding six quarters, the San Jose metro noted the largest vacancy increase among major U.S. office markets from April through June 2023. The 200-basis-point quarterly spike, which placed vacancy within 40 basis points of its historical high, was driven by tech companies subletting space following layoffs. Specifically, Google and Meta listed a collective 2.1 million square feet in Sunnyvale and Mountain View during the three-month window. Vacancy in Sunnyvale-Cupertino reflects these reductions, with the local rate rising 690 basis points in the second quarter. Still, the area remains the metro’s tightest major submarket, with vacancy at 15.4 percent. Additional headwinds may await the area, however, as subleasing activity has been scant of late and a group of larger speculative projects were underway as of September.

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