SAN JOSE — Big tech companies have buoyed Silicon Valley’s prospects greatly enough that the region’s office market is deemed to be best-poised for growth and resilience despite coronavirus-linked uncertainties, according to a report CBRE released Monday.
In contrast to the optimistic outlook for Silicon Valley’s office sector, the office market in San Francisco, which is dominated by startups and venture-backed new tech companies, faces the “greatest risk” for increases in sublease space due to companies downsizing their office requirements, reported CBRE, a commercial real estate firm.
“Silicon Valley was named the tech market that is most resilient and poised for future growth” in the annual Tech 30 report that CBRE released on Monday. The Tech 30 study focuses on the office markets in the nation’s 30 largest tech-oriented regions.
Major tech companies such as Google, Apple, Facebook, Netflix, and LinkedIn are helping to drive the demand for office space in Silicon Valley, CBRE reported.
“With its office market dominated by large-cap tech firms, Silicon Valley saw the fourth-greatest office rent growth across all markets at 11.6% in the two years ended June 30,” CBRE reported.
San Francisco, however, was a major office center for smaller and startup tech companies, CBRE noted.
“The city of San Francisco contains the largest concentration of young start-up and public companies that have been significantly affected by the pandemic-related shutdowns,” said Colin Yasukochi, executive director of CBRE’s tech insights sections.
Mountain View — where Google maintains its headquarters and has grabbed a widening amount of office space through leases and property purchases — has the second-lowest vacancy rate among tech-dominated cities with a 3.2% office vacancy, second only to the South Lake Union district of Seattle.
Technology companies have played a key role amid government-ordered business shutdowns to combat the coronavirus — and will likely continue to be a major factor once the closures to battle the deadly bug are eased once and for all, CBRE opined.
This outcome, if it occurs, would bode well for the office markets in Silicon Valley and possibly San Francisco.
“The tech industry was indispensable in enabling continued business activity during the COVID-19 shutdown,” CBRE stated in its report. “It will likely lead the next growth cycle by accelerating the digital transformation of the economy.”