SAN JOSE — Tech layoffs and retrenchments have shoved South Bay office vacancies higher and transformed downtown San Jose and Santa Clara into the area’s weakest office markets.
During the April-through-June second quarter of 2023, the South Bay’s office vacancy rate was 18%, according to a new report from CBRE. The commercial real estate firm estimated the first-quarter vacancy rate at 15.5%.
“The office market continued its downward trend in the second quarter of 2023,” CBRE said in its new report.
The real estate firm defines the South Bay as Santa Clara County and the Fremont-Newark area for the purposes of the report.
“Many large tech tenants continued to offload their underutilized space,” CBRE researchers stated.
Yet while the overall South Bay office vacancy rate is grim, it’s far below the office vacancy rates in the city of Santa Clara and in downtown San Jose.
Downtown San Jose during the second quarter posted an office vacancy rate of 26.6%, up from the first-quarter vacancy rate of 20%.
The spike in office vacancies in downtown San Jose was fueled primarily by the long-expected completion and availability of the 200 Park office tower produced by Jay Paul Co., one of the Bay Area’s most successful and savvy development firms.