Colliers' Silicon Valley Forecast Sees Healthy 2001 Despite Slowdown

SAN JOSE-The doom and gloomers are being shown the door out of Silicon Valley in a new forecast unveiled last week at the Colliers International Trends 2001 conference. While opinions vary about whether the economy has seen the worst of the recent downturn, no one at Colliers is playing the crying game.

Both total and net absorption will remain strong, according to Colliers, at 27 million sf and 5 million sf, respectively, despite a predicted rental decrease of 10% to 20%. After a 112% rise last year, such a decrease is in line, according to managing director Jeff Fredericks. “Given these expected outcomes, it would be difficult to argue that the wheels are falling off for Silicon Valley owners and developers of real estate.”

The investment market shows healthy levels of interest, though it will likely not reach the $2 billion of activity that took place in 2000. In the office market, where vacancy at year’s end was at 1.85% (compared to 3.72% at the end of 1999), demand is expected to remain strong. Of the 5 million sf of space under construction, nearly 85% is already spoken for.