San Jose Office Market Report

Strong office space demand contributes to rapid recovery. Since office vacancy peaked in 2023, the metro has absorbed roughly 5 million square feet of office space on net. It is on track to record the most net absorption as a share of inventory among all major U.S. markets this year. Leasing momentum should remain strong this year, supported by major commitments, including Databricks’ scheduled move into its 300,000-plus-square-foot space in Santa Clara. This underscores the metro’s ability to attract firms tied to its unique innovation ecosystem. High-end assets in submarkets such as Santa Clara and Sunnyvale-Cupertino should perform well this year. Vacancy drops of at least 100 basis points across classes in most of the metro’s largest submarkets speak to a broad foundation of improvement not found in all markets. As a result, the metro should see the average asking rent increase, at least nominally, for the first time in four years.