Silicon Valley Office Market
The Silicon Valley office market showed signs of recovery in Q3 2025, recording more than 481K SF of positive net absorption, the fourth consecutive quarter of growth following 2024 Q4’s positive 1.1M SF. Overall vacancy was 16.8%, a 170-basis point decrease from the previous quarter. This positive leasing activity signals a strong demand, with active tenants in the market now accounting for 9.3% of the total office inventory. Asking rents decreased to $5.02 per square foot full service in the third quarter of 2025, down $0.03 year-over-year. Rent changes across Silicon Valley submarkets had varied in recent years, driven by reduced availability and market adjustments.
Silicon Valley R&D Market
Vacancy rose from 13.2% in Q3 2024 to 13.7% this quarter, bringing the 2025 year-to-date average to 13.6%. Despite the year-over-year increase in vacancy, direct and sublet vacancy decreased quarter-over-quarter. After years of steady growth, Silicon Valley R&D rents fell 3.1% year-over-year. Mountain View stood out amid the slowdown, with Shoreline maintaining the Valley’s highest asking rents, driven by its prime location, amenities, and infrastructure. Silicon Valley’s R&D sector recorded 2.3M SF of gross absorption in Q3 2025, 12.0% above the 6-year average leasing trend. 38.7% of the Valley’s leasing activity occurred in the San Jose submarket.
Silicon Valley Industrial Market
Vacancy in the third quarter decreased 90 basis points from the previous quarter but increased 50 basis points year-over-year. At 5.6%, third quarter vacancy is now equal to the 20-year long-term average. Following a seasonal trend, the third quarter closed on a high note as gross absorption recorded 2.3M SF, a 68.0% increase from the previous quarter. This represented the highest amount since the first quarter of 2019. Asking rents in the third quarter of 2025 increased 90 basis points compared to the previous quarter, with average asking rates recording $1.65 per square foot NNN. Overall, market wide asking rates represented a 4.4% increase year-over-year from 3Q 2024.