by Bill McBride on 10/24/2009 08:23:00 PM
Saturday, October 24, 2009
From the Mercury News: Silicon Valley office vacancies near 20 percent
Nearly one-fifth of Silicon Valley office space stood empty last quarter, while landlords lowered rents to try to retain tenants and attract new ones, according to a [report from commercial real estate firm Grubb & Ellis] released Friday.Some of the increase in the vacancy rate was because of new office space coming online, but it sounds like Grubb & Ellis expects a significant amount of sublease space to come on the market too. That is usually a bad sign for rents - and also suggests companies don't expect much growth.
The rising vacancy rate is "re-emphasizing that this is the slowest commercial real estate market the valley has seen since the dot-com bust in 2001," the report stated.
Empty space for research and development, the one- to three-story buildings where so many smaller tech companies reside, is also beginning to pile up, said Dick Scott, Grubb & Ellis' managing director in Silicon Valley. ...
"There was a temporary period of time where we all were naively optimistic that R&D would hold up. But it's taking a hit now," he said.
Said the Grubb & Ellis report: "Expect asking rents to decrease as companies put unoccupied space onto the market."
Posted by Bill McBride on 10/24/2009 08:23:00 PM