Empty Offices Accumulating in US Silicon Valley

Silicon Valley Office Vacancy Rate at 17%
Cost-Cutting and Remote Work Spread Due to Big Tech Layoffs Impact

Empty offices are increasing in Silicon Valley, USA. Following last year's layoffs by tech companies and the spread of remote work systems since COVID-19, office demand is expected to decrease further.

According to market research firm CoStar Group on the 21st (local time), the office vacancy rate in Silicon Valley, California, recorded 17% as of June. This is a significant increase from 11% in 2019.

Some areas such as Mountain View and Menlo Park, where Google's headquarters are located, saw office vacancy rates exceed 20% at times this year.

Douglas Linde, president of Boston Properties, said, "There is not much demand from tech companies in this (office building) market," adding, "There is virtually no leasing activity for the office building our company is developing in San Jose. No conversations are taking place there."

The office vacancy rate in Silicon Valley, home to global tech companies, is still relatively low compared to the entire San Francisco area. The office vacancy rate in the northern part of San Francisco currently stands at 25%, tripling since 2019. Vacancy rates surged as small companies hit by the economic slowdown quickly canceled lease contracts.

On the other hand, big tech companies concentrated in Silicon Valley, such as Google, Meta, and Apple, have been relatively reluctant to reduce office space. As a result, vacancy rates have been relatively lower compared to the entire San Francisco area. However, as tech companies conducted large-scale layoffs last year and partially maintained the remote work system introduced during the pandemic, office demand is gradually decreasing. This is why office vacancy rates are expected to rise in the future.

It is not only tech companies that are reducing Silicon Valley offices. The office demand of venture capital (VC) firms is also rapidly declining. According to US real estate firm CBRE, the office vacancy rate on Sand Hill Road, where Silicon Valley VCs are concentrated, has soared to 14%, more than three times higher than in 2019.

The WSJ stated, "Empty offices are piling up in Silicon Valley," and predicted, "As tech companies carry out layoffs and close unused spaces, the vacancy rate gap between Silicon Valley and the entire San Francisco area is expected to gradually narrow."

This content was produced with the assistance of AI translation services.