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Silicon Valley Office Outlook: Low Vacancy, Flat Rent, High Demand
On February 9th, Connect Silicon Valley panelists shared insight on the region’s office market, as well as their 2016 outlook as tech tenants continue to inundate the area.
Moderated by Rick Cipra (Ervin Cohen & Jessup LLP), the office panel included: Jeff Cushman (Cushman & Wakefield), Steve Dunn (SteelWave), Phil Mahoney (Newmark Cornish & Carey), and Mike Sanford (Kilroy Realty Corporation).
From the development side to tenant representation, all panelists agreed that there is too much demand for the current supply. For developers, tenants who want to expand are running into a brick wall. The solution? There will be a natural flow southeast into areas like Milpitas, Fremont, South San Jose, and even the East Bay.
Despite the stock market and global economy’s volatility, both Cushman and Mahoney agree that there is little concern for an impending recession. Cushman said, “This is hardly 2008. We have room to run.”
With a younger workforce comes shifting patterns of labor, with different demands from previous generations, and that is why developers like SteelWave are focused on bringing a “resort mentality to buildings.”
Overall, the general consensus was that vacancies will continue to be low, and rents will be flat or slightly up, as companies continue to hire and expand. Mahoney noted, “When you look back at 2016, and take out 2014-15, you will probably think it was a really great year.”
