San Jose Office Investment Forecast
Large Investors Optimistic About Silicon Valley Market as Employees Trickle Back to Offices
New supply outpaces resumption of office demand. San Jose's office market is bolstered by the metro's anchor employers' commitment to bringing workers back into the office when concerns of COVID-19 transmission abate. Google, Apple and Facebook have resisted the idea of permanent remote work, which will help regenerate conditions closer to those observed prior to the health crisis. Facebook committed to more than 1 million square feet of space in the second half of last year, including 719,000 square feet in Sunnyvale, the largest lease signed in the U.S. in 2021. Many workers have already returned to the South Bay following shutdowns, evident by the drop in multifamily vacancy to pre-recession levels. Although the demand outlook is optimistic, supply growth will apply upward pressure to availability. Of the 7 million square feet scheduled for delivery in the next two years, approximately 75 percent is pre-leased. However, the new stock will compete with existing properties that are backfilling space abandoned during the downturn.