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Is CBD Next As Silicon Valley Tightens?

SAN JOSE-As vacancy rates continue to drop in some Silicon Valley markets, some office tenants are considering a move to San Jose’s CBD, where large blocks are available.

By Carrie Rossenfeld | Updated on August 02, 2012

SAN JOSE-With class-A office vacancy dropping to 3% or lower in some Silicon Valley submarkets and rental rates continuing to rise, tenants may begin to look at the CBD as a smart alternative with more available space options, says Mike Michaels of Cresa’s San Jose office. Class-A office vacancy in downtown San Jose is 19%, and asking rent for class-A space is $34.50 per square foot, $1.50 per square foot lower than in the suburbs, “but companies still have more negotiating clout in downtown San Jose, where it remains a tenant’s market,” adds Michaels.

According to Studley’s report on office-market conditions in 12 Silicon Valley submarkets, the region has sustained its dynamic performance in the second quarter as the technology sector continued to secure space at an unprecedented pace. The top three transactions in the areas all involved technology occupiers: LSI Corp.’s 220,590-square-foot purchase in North San Jose, LinkedIn’s 165,000-square-foot lease in Sunnyvale and Infoblox Inc.’s 126,594-square-foot lease in Santa Clara. Cresa’s second-quarter tenant’s guide reveals that other major lease transactions in the San Jose area involved Theranos, Synopsys, Barnes & Noble, 8×8 and Ruckus.

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