Silicon Valley Office Leasing Hits Five-Year High
Led by a bevy of big-ticket tech deals, office leasing volume in Silicon Valley has soared to 2.4M square feet in the fourth quarter, the first time the quarterly tally has topped 2M square feet since Q2 2019.
A leasing surge of more than 4M square feet in the second half of 2024 pushed the full-year deal volume over 5.5M square feet in Silicon Valley, setting the stage for a potentially robust office recovery in 2025.
The overall office availability rate in Silicon Valley dropped by 160 basis points to 25.9% in the fourth quarter, down from 27.6% in Q3 2024, Savills reported. Available sublease space in Silicon Valley totaled 6.6M square feet at the end of 2024, a 25% drop from the 8.8M square feet available at the end of 2023.
In December, cloud-based data platform Snowflake announced that would sublease a 773K square foot campus in Menlo Park from Meta, the largest office lease in the Bay Area region in nearly 15 years. The rapidly expanding data player, which has more than doubled the size of its workforce in the past two years, will take over a four-building campus at 125-135 Constitution Drive and 100-150 Independence Drive, part of the Menlo Gateway project owned by Bohannon Cos.
Astera Labs, a leading provider of semiconductor-based connectivity chips and a strategic partner of AI giant Nvidia, inked a deal in Q4 to relocate its headquarters from Santa Clara to an office campus in San Jose, roughly tripling its footprint to about 154K square feet.
Astera will move its HQ into three buildings located at 2345, 2315, and 2343 North First Street in San Jose after construction on improvements is completed at the San Jose campus and the company’s current lease expires in the second quarter of 2025, according to an SEC filing.
In early December, Nvidia signed a lease for a 102K square feet building at 300 Holger Way in San Jose. The AI chip giant continues to expand its leasing footprint after purchasing its Santa Clara headquarters complex in May for $374M in a deal that included 2M square feet of development rights.
The office recovery in Silicon Valley is being driven by growing momentum for return-to-office mandates, as well as the rapid expansion of the generative AI sector.
Amazon, which ordered its employees to return to the office five days a week starting this month, has delayed the mandate for workers in several cities because it doesn’t have sufficient office space to house them, Business Insider reported. In Q4, the tech giant signed a lease to occupy 218K square feet at 401 San Antonio Road in the Mountain View/Los Altos submarket and renewed a deal for about 182K square feet at 2795 Augustine Drive in Santa Clara.
Average Class A asking rental rates in Silicon Valley, which ended 2024 at $5.21 per square feet, are expected to rise in 2025 as more return-to-office announcements are made while older obsolete office buildings struggle with lease-up as the tenant flight to quality continues, Savills said.
Source: GlobeSt/ALM