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3w ago

Silicon Valley Leasing Surges as Construction Pipeline Falls to Lowest Since 2013

Office vacancy sits near 22% with lab space around 37%, signaling a fragile recovery despite fuller leasing.

Office building at 250 West Washington Avenue in downtown Sunnyvale, foreground. An office building at 200 West Washington is in the left background. (Cityline)

Overview

  • Tenants signed 20.4 million square feet in the third quarter of 2025, a 48.9% increase from the prior quarter, according to Joint Venture Silicon Valley and JLL.
  • Space under construction fell to 4.5 million square feet, down 45% from the end of 2024 and the lowest level since 2013.
  • Net absorption turned slightly positive, indicating tenants occupied marginally more space than they vacated.
  • Vacancies remain elevated, with the office rate edging down to about 22.2% and laboratory space near 37%.
  • Developers are pivoting away from traditional offices, which represented about 22% of new builds, as lab and industrial projects make up more than two-thirds of recent construction.