Office availability increases yet again as the technology sector is now in correction

In the second quarter 2022, the total availability rate in the Silicon Valley office market increased 90 basis points (bps) over last quarter to 20.9%. This was also up 160 bps from 19.3% reported a year ago. With the Federal Reserve raising interest rates to fight inflation, the entire global technology sector has been affected with much greater scrutiny by investors and lenders on technology firms, especially those still operating at a loss. The overall average asking rental rate ended the quarter at $4.71 per square foot (psf) per month. This was down from $4.78 psf per month reported a year ago. With continued concerns over inflation, expect interest rates to continue to rise which might slow overall economic growth in general and have a negative effect on the technology sector, especially amongst startup firms. As a result, expect office availability rates to continue to rise while downward pressure will remain on both average asking and effective rental rates.

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