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8/6/2019 Silicon Valley IND 2Q11
http://slidepdf.com/reader/full/silicon-valley-ind-2q11 1/2
Stats on the Go
OverviewSilicon Valley’s industrial market performed well during the second
quarter. Driven by high tech and manufacturing companies, total
employment grew by 1.9% year-over-year through June 2011,
according to Moody’s Analytics. Electronic manufacturing
companies were especially robust in their first quarter hiring,
contributing to overall manufacturing employment rising 3.2% and
tech employment increasing a strong 4.7% during this time. As of
May 2011, the unemployment rate for the San Jose metropolitan area
stood at 9.7%, well below the state average of 11.4%.
Market ActivitySilicon Valley’s industrial market tightened further in the second
quarter with the vacancy rate declining to 11.9% from 13.0% at year-
end 2010. The demand for tech space drove the high tech overall
vacancy rate down to 14.9% from 16.4% at year-end 2010.
Cupertino is one of the hottest submarkets in the Valley as the
vacancy rate stood at a mere 1.0% in the second quarter, down from
5.4% at year-end 2010. Newark’s high tech market posted increased
activity with the vacancy rate falling to 31.2% from 44.7% on the
heels of Logitech International committing to nearly 265,000 square
feet (sf). Mountain View remains as one of the most active markets
due in large part to numerous deals by tech giant Google, as well as aroughly 114,583 sf lease by Siemens USA.
Year to date, nearly 7.0 million square feet (msf) of industrial space
has been leased. Of this, more than 3.6 msf was leased in the second
quarter resulting in quarterly leasing activity rising 9.5% from the
first quarter. Compared to the San Francisco Peninsula, renewal
activity accounted for a larger share of leasing activity in Silicon
Valley, accounting for 33.8% of the volume versus 18.4% in the
Peninsula. Improving market conditions resulted in the average direct
asking rent rising 3.3% to $0.93 per square foot per year (psf) during
the first half of 2011. Market conditions also improved in the
warehouse/distribution segment of the market with the vacancy rate
dropping to 7.2% in the second quarter from 8.1% at year-end 2010.
Investment ActivitySales volume totaled nearly 2.0 msf in investor activity and another
1.1 msf in user-sale volume. Flushed with cash, institutional and high
net worth investors acquired well-priced portfolios in the Valley in an
effort to take advantage of pricing opportunities. Localinvestor/developer, Peter Pau acquired a nine building portfolio in Los
Gatos for nearly $132 psf. Capmark Financial purchased an eight
building portfolio in Sunnyvale and San Jose for $128 psf. LBA
Realty acquired a nine building portfolio from Sobrato Development
for approximately $112 psf. Google was the most active user buyer,
purchasing nearly 260,000 sf in nine buildings in Mountain View.
Medical supply companies were also active, including Intuitive
Surgical, Purity Cosmetics and St. Jude Medical.
Outlook Total job growth is forecast to gain traction through the next two
years, growing by 1.8% in 2011 followed by an increase of 2.1% in
2012. New job creation is expected to lead to increased leasing
activity, pushing the vacancy rate down during this period. Two
speculative data centers totaling 280,000 sf in Santa Clara are the only
projects currently under construction in the market area with delivery
slated for the third quarter of 2011. Given these positive forecasts,
demand is anticipated to outpace supply, yielding tightening market
conditions and positive rent growth.
Leasing Activity vs.
Overall Absorption
Overall
Rental vs. Vacancy Rates
SILICON VALLEY
2Q11
(10.0)
(5.0)
0.0
5.0
10.0
15.0
20.0
2007 2008 2009 2010 2Q11
m s f
Leas ing Activi ty Overa ll Absorption
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
2007 2008 2009 2010 2Q1
p s f / y r
Rental Rate Vacancy Rate 2Q10 2Q11 Y-O-Y
Change12 monthForecast
OverallVacancy
13.7% 11.9% -1.8 pp
Direct AskingRents (psf/mo)
$0.93 $0.93 0.0%
YTD LeasingActivity (sf)
4,716,446 6,953,140 47.4
8/6/2019 Silicon Valley IND 2Q11
http://slidepdf.com/reader/full/silicon-valley-ind-2q11 2/2
* The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of theinformation contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listingconditions imposed by our principals. © 2011 Cushman & Wakefield, Inc. All rights reserved.
Cushman & Wakefield of California, Inc. – Lic. #00616335
560 S. Winchester Boulevard, San Jose, CA 95125 (408-436-5500) www.cushmanwakefield.com
Market/Submarket Statistics
Market Hi hli hts
SILICON VALLEYINDUSTRIAL REPORT
2Q11
SIGNIFICANT 2Q11 LEASE TRANSACTIONS
BUILDING MARKET TENANT SQUARE FEET PROPERTY TYP
7600-7700 Gateway Boulevard Newark Logitech International 263,453 High Technolog
464-468 Ellis Street Mountain View Google, Inc. 195,553 High Technolog
675-685 East Middlefied Road Mountain View Siemens USA 114,583 High Technolog
355 East Trimbel Road San Jose Qualcomm, Inc. 96,780 High Technolog
411 East Plumeria Drive San Jose NXP Semiconductors 86,602 High Technolog
SIGNIFICANT 2Q11 SALE TRANSACTIONS
BUILDING MARKET BUYER SQUARE FEET PURCHASE PRIC
Sobrato Nine Building Portfolio Silicon Valley LBA Realty 729,033 $82,000,00
Capmark Eight Building Portfolio Silicon Valley Rockpoint/Embarcadero 538,694 $68,686,48
1050-1090 Kifer Road Sunnyvale Intuitive Surgical, Inc. 235,109 N/
SIGNIFICANT 2Q11 CONSTRUCTION COMPLETIONS
BUILDING MARKET MAJOR TENANT SQUARE FEET COMPLETION DAT
N/A
SIGNIFICANT PROJECTS UNDER CONSTRUCTION/RENOVATION
BUILDING MARKET MAJOR TENANT SQUARE FEET COMPLETION DAT
2972 Stender Way (Data Center) Santa Clara 100,000 3Q1
555 Reed Street (Data Center) Santa Clara 180,000 3Q1