market conditions remain tight, but new development could open options
Overall availability in the Silicon Valley market declined 170 basis points over the year to end Q1 at 13.6%. Class A availability saw a similar decline, dropping 120 basis points year-over-year to 15.2%. Tighter market conditions have resulted in a development boom – which should open additional options in the future. Approximately 6.0 million square feet (msf) of new office inventory is expected to come to market in the first half of 2019, with most of that space already pre-leased. Of note, Palo Alto, one of the Bay Area’s prime submarkets, removed its commercial real estate office cap of 350,000 square feet (sf), implementing an overall development maximum equal with the rest of the city (850,000 sf); a result of an oversaturated market in dire need of additional space.