Silicon Valley Office Absorption at All-Time Low, Subleasing Surges

The vacancy rate in the Silicon Valley office market hit 19.4% in the second quarter as net absorption registered an all-time low of negative 1.4M SF, while sublease vacancies shot up 290 basis points compared to the first quarter.

At the end of the first half of 2023, sublease vacancies in Silicon Valley totaled 4.4M SF, according to JLL’s office market report.

The report cited tech companies subletting large blocks of space as drivers of this expansion, specifically Google’s vacating of offices in Mountain View and Sunnyvale.

Google continues to trim its massive office footprint in Silicon Valley, listing for sublease this week more than 182K SF in a Palo Alto campus it has occupied for nearly a decade.

Newmark has been tapped to market space in four buildings at the Foothill Research Center, located at 4001, 4005, 4009 and 4015 Miranda Avenue, according to CoStar.

The search giant continues the office downsizing that reached a crescendo in May when Google listed 1.4M SF for subleasing in Mountain View and Sunnyvale. The lion’s share of the space being offloaded by Google is in the Moffett Park campus in Sunnyvale owned by Jay Paul Co.

The Sunnyvale property, which is being marketed by Cushman & Wakefield, includes 1000 Enterprise Way, a 228K building; 1020 Enterprise Way, a 317K SF building Google has been leasing since 2019; and 1050 Enterprise Way, a 193K SF building.

Also listed for sublease in Sunnyvale is a 27K SF building at 1215 Bordeaux Drive.

The space being listed in Mountain View includes 600 Clyde Avenue, a 190K SF building owned by Renault & Handley that Google has occupied since it was delivered in 2019. The five-story building, which is being marketed by Newmark, is vacant and available through August 2031.

Also listed for sublease in Mountain View is 620 National Avenue, a 151K SF building that also is vacant—the property, which is being marketed by Colliers is available through May 2029; 750 Moffett Boulevard, a 222K SF space in Ameswell, a mixed-use complex developed by Broadreach Capital Partners in 2020. Google has vacated the building at 750 Moffet, which is being marketed by Newmark.

In April, Google halted work on an 80-acre Urban Village in downtown San Jose. The $19B project, known as Downtown West, was planned to include more than 4,000 homes, 7.3M SF of offices, 500K SF of shops and restaurants, as well as 15 acres of public parks.

Downtown West was expected to house 25,000 Google workers in a new neighborhood surrounding the planned Diridon Station, which will be built at the intersection of Amtrak, BART, Caltrain and new high-speed rail lines.