SAN JOSE — Office vacancy rates have increased in the South Bay and have ballooned to scary heights in San Francisco amid a wobbly economy punctuated by wide-ranging job cuts in the tech and biotech sectors.
The worsening state of the tech sector fueled jumps in the availability of office space during the first three months of 2023 in the South Bay and San Francisco, according to a new report by Savills, a commercial real estate firm.
Silicon Valley’s office vacancy rate increased to 23.1% in the first quarter of 2023, a level that Savills described as a “new historical high,” and up from 22.7% in the final three months of 2022, the company stated in the report.
San Francisco’s office vacancy level rocketed 32.7%, “a new all-time high,” in the 2023 first quarter, up from 32.1% in the fourth quarter of 2022, Savills reported.
Asking office rents in San Francisco averaged $5.89 a month in the January-through-March quarter of 2023, down from $5.94 a month in the October-through-December quarter of 2022.
“We expect office availability (in San Francisco) to continue to increase in 2023 as the slowdown in the technology sector persists,” Savills said in the report.
Silicon Valley asking office rents averaged $4.99 a month during the first quarter of 2023, up from $4.95 a month in the fourth quarter of 2023.
“Office space demand (in Silicon Valley) has been down significantly as the technology sector continues to undergo a serious correction with mass layoffs and a general freeze in office leasing,” Savills reported.
