One in five office buildings in Silicon Valley is now vacant due to decreased demand amid tech layoffs and a stalled return-to-office movement, a new report says.
An estimated 19.8% of Silicon Valley office space was on the market for lease or sublease between July and September 2023, according to the report by Colliers, a commercial real estate firm.
The difference in Silicon Valley office space being vacated versus leased was a whopping 1.8 million square feet in the third quarter, the highest since the Great Recession in 2009, which saw a difference of 1.5 million square feet.
“Office demand decreased as occupiers navigated developing trends in remote work and return-to-office while the technology sector has not returned to its pre-COVID hiring trends after mass global layoffs,” Colliers stated.
These office markets are the Silicon Valley’s weakest by availability rate, according to the report:
“The Silicon Valley office market is expected to face constraints in the coming quarters considering low trends in return-to-office, a cautious venture capital environment, rising vacancies and uncertainties in the economy,” Colliers said.
The report also forecasts that one of the same forces driving the vacancies could be one that drives workers back to the office.
“As companies begin to enforce hybrid schedules and with the ever-present threat of layoffs, workers may be motivated to return to the office, which would improve office occupancies,” the report said.
Garrett Leahy can be reached at email@example.com