Silicon Valley office market shows vacancy improvement after weak stretch

SAN JOSE — Vacancy levels improved and rental rates rose during the first three months of 2025, a welcome improvement in the battered South Bay office market after months of weaker conditions, a new report shows.

“The Silicon Valley office market showed resilience in the first quarter,” Colliers stated in its first-quarter report about the South Bay office sector.

The office vacancy rate in Silicon Valley improved to 16.4% in the January-through-March quarter of 2025, commercial real estate firm Colliers disclosed in its latest office market report. For the survey, Silicon Valley was defined as Santa Clara County and Fremont.

The first-quarter level was better than the 16.6% office vacancy rate in the just-prior October-through-December fourth quarter of 2024 — but worse than the 16% South Bay office vacancy in the first quarter of 2024, Colliers reported.

Rental rates are rising and improving for office buildings in the South Bay, Colliers reported.

During the first three months of this year, the average asking rate for monthly office rent was $5.41 a square foot.

The asking rent was higher than the $5.36 average office rent during the final three months of 2024 and higher than the average asking office rent of $5.35 in the similar first-quarter period in 2024, Colliers reported.

In another hopeful sign, the amount of space available for sublease is dwindling as office tenants seek to place less space on the market that they are leasing, according to the Colliers report.

An estimated 4.3% of the Silicon Valley office space was being made available for sublease in the January-through-March period of 2025.

That was an improvement from the office sublease rate of 4.7% in the October-through-December fourth quarter and the 5.5% sublease rate in the first three months of 2024, according to Colliers.

“The Silicon Valley office market continued its positive momentum,” Colliers stated in the report.