The office and R&D sectors had a sluggish start to 2019, after a solid 2.85 million square feet of occupancy in 2018.

SAN JOSE—Certainly a key indicator for the commercial real estate sector is job growth. And while such growth has slowed compared to a few years ago due to the fact the market appears beyond typical full employment, the San Jose metro statistical area continues to add jobs.

“Year-over-year, the San Jose MSA added 24,200 non-farm positions, while unemployment has tumbled to a mere 2.5%, compared to the national figure of 3.8%,” says Julie Leiker, Cushman & Wakefield's Silicon Valley market director.

Despite this, Silicon Valley's office and R&D sectors revealed a sluggish start to 2019, after having combined for a solid 2.85 million square feet of occupancy growth in 2018—largely stemming from the office sector, according to Cushman & Wakefield's latest market report. While the office market did continue its growth trend, reporting another 269,000 square feet of positive net absorption in the first quarter, the R&D sector finished with a negative 265,000 square feet, leading to a virtual wash between the two sectors. Notably, both sectors maintain very healthy single-digit vacancies coupled with rent growth, while demand remains strong.