SV office demand jumps

Silicon Valley’s office market opened 2026 with its sixth straight quarter of occupancy gains as large tenants signed new blocks of space. (cbre.com) Commercial real estate firms put the rebound in slightly different terms, but the direction matches: CBRE said overall vacancy was 15.4% in the first quarter of 2026 with 769,556 square feet of net absorption, while Colliers reported 14.8% vacancy and 436,479 square feet of net absorption. (cbre.com) (colliers.com) Leasing volume jumped, too. Savills said Silicon Valley recorded 3.2 million square feet of quarterly leasing in the first quarter, a post-pandemic high and about 1.7 million square feet more than the prior quarter. (savills.us) The biggest driver was a new wave of artificial intelligence tenants taking large, high-end offices. Colliers said three leases topped 200,000 square feet in the quarter, and Savills said the 10 biggest deals were all signed by technology companies. (colliers.com) (savills.us) That marks a sharp turn from 2024, when vacancy was still climbing in parts of the market. Cushman & Wakefield said Silicon Valley’s research-and-development vacancy rate hit 13.0% in the second quarter of 2024, the sixth straight quarterly increase, and sublease space made up 26.8% of vacant inventory in that segment. (cushmanwakefield.com) The current rebound is concentrated in newer buildings and larger blocks, not a full recovery across every submarket. Colliers said Sunnyvale led absorption gains, while San Jose and Palo Alto still posted occupancy losses tied to corporate consolidations. (colliers.com) One of the quarter’s marquee deals came from OpenAI. Colliers said the company signed a 447,000-square-foot lease that helped offset new vacancies, and KKR Real Estate Finance Trust and TMG Partners later identified the property as the 350-380 Ellis campus in Mountain View, a five-building site of about 450,000 square feet. (colliers.com) (kkrreit.com) Databricks has been another major taker of space in Sunnyvale. Hunter Properties said Databricks signed a 455,000-square-foot lease at the Cityline development in January 2026, and later reports said the company added another roughly 180,400 square feet at 100 Altair Way. (hunterproperties.com) (therealdeal.com) Landlords are also getting some pricing support. CBRE said the average asking rate in Silicon Valley was $5.31 per square foot per month on a direct full-service basis in the first quarter, while Colliers said competition for Class A offices pushed asking rents higher. (cbre.com) (colliers.com) The result is a narrower story than a broad office comeback: artificial intelligence firms are filling some of Silicon Valley’s biggest empty campuses, and the rest of the market is still sorting through older space, downsizing, and submarket splits. (savills.us) (colliers.com)