More Office Space, Lower Leases In Silicon Valley
San Jose Mercury News reports: When comparing all of 2008 with 2007, the results are similarly stark. According to Real Capital Analytics and LoopNet data, only 123 commercial properties worth more than $5 million sold in Silicon Valley in 2008, compared with 243 in 2007. In 2008 the total sales volume for those deals was $3 billion, compared with nearly $8.8 billion the previous year.
The biggest deal that closed in the area in 2008 was the $191 million sale of The Park Kiely, an apartment complex in San Jose. In 2007 the top deal was the sale of the Mathilda Place office buildings in Sunnyvale for $272 million, Real Capital Analytics reported.
With the economy in turmoil, vacancy rates rose at the end of last year in both office and R&D space, the Cornish & Carey report showed. Vacancy in R&D — so-called research and development buildings, which tend to be one- and two-story structures — rose to 16.8 percent in the fourth quarter, or 24.7 million unoccupied square feet. That's up from 15.5 percent in the third quarter.
Asking rents for office space, meanwhile, dipped slightly in the fourth quarter, to an average of $2.67 per square foot per month. That's a decline from $2.71 in the third quarter, and down from a recent peak of $2.91 in the fourth quarter of 2007.
Among cities in Santa Clara County, office rental rates ranged from an average of $3.78 per square foot per month in Palo Alto to an average $1.98 in Milpitas.
Those rates are likely to keep eroding, experts said. Tenants seeking new space are negotiating for lower rents, and plenty of tenants with time remaining on their leases are going to their
landlords early to seek lower rates.
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Posted by: Nina Turner