Silicon Valley office leasing activity drops precipitously at year-end 2022

In the fourth quarter 2022. leasing activity of a little over 0.5 million square feet (msf) was the lowest quarter for office space demand since the first quarter 2021 when just 0.4 msf was leased. Due to the slowdown in the technology sector where both large conglomerates and private startups are now in cost cutting mode, leasing activity was a 69% decrease from 1.7 ms reported last quarter, as well as a 73% decrease from 2.0 msf reported a year ago. Full year 2022 total leasing activity of 4.2 msf was down 5% from 45 msf reported in 2021. Compared to 2019 when total leasing activity was 7.1 msf, office space demand is down 41% from pre-pandemic levels. With the technology sector now undergoing a correction, slow return to office utilization rates, and many companies looking to control costs in an uncertain economic environment, expect leasing activity to continue to be at a lower level going into 2023.

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