November 13, 2009
CPS emailed us their 3rd quarter Silicon Valley update. It’s a pretty good report that is a bit different than the typical quarterly report which just puts up vacancy and rental rates for each sub-market in that it stratifies the supply in the market, and also goes a bit beyond just a table of rents and vacancies as so many reports tend to do. We already know things are bad, but there are always opportunities regardless of what is happening in the market. What you’ll notice is that there is a bit of a void in the market in certain size ranges, particularly office in the 100-150K range.
Chances are it won’t be a coincidence then that we will see a pickup of deals getting done in the 100-150K SF size range. We already saw the Harris Stratex deal get done at 128K and there are numerous other requirements floating around in this size range (LinkedIn, Ultratech, and several others). So we will likely see more activity in this range as as companies will have an incentive to be first out of the gates to lockup the quality space under favorable terms before others do.
The report though does the raise the general question of what qualifies as office and what as R&D in reports since the report showed zero availability in the 3rd quarter (before the Harris Stratex deal got done) for 120K-140K SF size spaces. Most likely they classified that building as R&D, but in Silicon Valley, if a building is two stories with a window line, is more than 85% office, and has 3/1000+ parking, we’d say it’s an office building.
At the end of the third quarter of 2009, 12.6 million square feet of office space was available in Silicon Valley, an increase of 256,110 square feet compared to the prior period. Since bottoming at 14.5% at the end of the second quarter of 2007, office availability has increased by a cumulative 6.2 million square feet. As of the most recent quarter, office availability stood at 26.3%. Approximately 3.6 million square feet, or 58.0%, of the 6.2 million square feet of office space added to the available inventory since Q207 is new speculative construction that remained unleased as of the third quarter of 2009.
The full report is embedded below.
On a side note, we’ll be adding a section for market reports and other related docs. If you want to send us market reports and other relevant documents to post, just email it to us using the email link on the About page. If it’s interesting we’ll try and feature it in a blog post, and if it’s just generic, we’ll at least make it available for others to download.
- A Rant On Requirement Blasts
- Damn The Bargains – High End Office Demand Opens Up
- Grubb & Ellis Q4 2009 Office Report
- Weakness in Rents Beginning to Show
- National Venture Capital Association Issues Bleak Report; State of “Crisis”