Silicon Valley Commercial Office Space for Rent

Q3 2026

Q3 2026 Silicon Valley Commercial Real Estate Market Report

Focus: Q3 2026 Market Trends

Executive Summary

Silicon Valley's commercial real estate market strengthened in Q3 2026, with office posting its fourth straight quarter of positive absorption, leasing up 70.7% year to date, and industrial vacancy falling to 4.6%. Tenant demand on TenantBase reflects the same momentum: office space accounted for 70.3% of all Silicon Valley tenant searches in Q3, more than ten times its 6.6% share in Q2, and office tenants are committing to longer terms.

Sector Snapshot

  • Office: Recovering. Total vacancy fell to 15.9% on 491,072 SF of positive absorption, led by major Google and Amazon leases in Sunnyvale.
  • Industrial: Tight. Vacancy fell to 4.6% with a third straight quarter of positive absorption.
  • Retail: Tightening. New construction remains among the lowest of major U.S. markets, putting downward pressure on vacancy.
  • Multifamily: Very tight. Stabilized occupancy was 96.6% with rents up 3.6% year over year.

Silicon Valley Tenant Demand Index

The TenantBase Tenant Demand Index tracks what businesses across Silicon Valley and the Peninsula are actively searching for on the TenantBase platform each quarter. Because it measures tenant intent before leases are signed, it shows where demand is heading ahead of traditional vacancy and absorption data.

Q3 2026 Search Share by Space Type (July 1 to September 30, 2026)

  • Office: 70.3%
  • Retail/Storefront: 21.6%
  • Warehouse/Industrial: 8.1%

Three-Quarter Trend

  • Office: 11.1% in Q1, 6.6% in Q2, 70.3% in Q3
  • Retail/Storefront: 59.9% in Q1, 66.1% in Q2, 21.6% in Q3
  • Warehouse/Industrial: 29.0% in Q1, 27.3% in Q2, 8.1% in Q3

Key Takeaways

  • Office demand jumped more than tenfold, from 6.6% to 70.3% of Silicon Valley searches, the largest shift of any category this year.
  • Office tenants are committing longer. Searches for office terms under one year fell from 46.2% in Q2 to 23.1% in Q3, while 3 to 5 year terms rose from 7.7% to 26.9%.
  • Long-term office tenants need more space. Tenants seeking 5+ year terms averaged 4,167 to 8,333 SF, more than four times the 1,000 to 1,750 SF sought for terms under one year.
  • San Jose dominated location interest, appearing in far more searches than any other city, followed by Sunnyvale, Cupertino, Mountain View, and Palo Alto.

Office Market

Silicon Valley office leasing surged in Q3 2026, driven by large technology users, while new construction nearly disappeared.

Key Metrics (Q3 2026)

  • Total vacancy: 15.9%, down 160 basis points year over year, with direct vacancy at 14.1% (Kidder Mathews)
  • Q3 net absorption: positive 491,072 SF, the fourth straight positive quarter (Kidder Mathews)
  • Year-to-date leasing: 8.9 million SF, up 70.7% year over year (Kidder Mathews)
  • Average asking rent: $4.98/SF per month full service, up 2.7% year over year (Kidder Mathews)
  • Submarkets: San Jose at 16.5% direct vacancy and $4.09/SF, Palo Alto at 13.7% and $7.50/SF, Sunnyvale at 13.1% and $5.63/SF (Kidder Mathews)
  • Notable leases: Google, about 2.1 million SF across Moffett Place and Crossman Ave in Sunnyvale, and Amazon, 318,255 SF in Sunnyvale (Kidder Mathews)

TenantBase Office Activity

Demand share: 70.3% of Silicon Valley tenant searches, up from 6.6% in Q2 and 11.1% in Q1.

Lease term preferences:

  • 2 to 3 years: 34.6%
  • 3 to 5 years: 26.9%
  • Less than one year: 23.1%
  • 5+ years: 15.4%

Space requirements by term:

  • Less than one year: 1,000 to 1,750 SF
  • 2 to 3 years: 715 to 1,780 SF
  • 3 to 5 years: 1,625 to 3,375 SF
  • 5+ years: 4,167 to 8,333 SF

Top locations: San Jose was the most requested area by a wide margin in Q3, both on its own and in multi-city searches. Sunnyvale, Cupertino, Mountain View, Palo Alto, and Redwood City followed.

TenantBase data vs. the market: Silicon Valley's office recovery is being led by tech giants taking hundreds of thousands of square feet, but TenantBase data shows small and mid-size firms are active too, most needing under 3,500 SF. San Jose, the most searched city, also has the highest direct vacancy of the three largest submarkets at 16.5% and the lowest rent at $4.09/SF, giving small tenants there real leverage. Tenants targeting Sunnyvale or Palo Alto should expect tighter conditions and higher rents.

Industrial & Warehouse Market

Key Metrics (Q3 2026)

  • Industrial vacancy: 4.6%, down 70 basis points quarter over quarter (Kidder Mathews)
  • Q3 net absorption: positive 563,526 SF, the third straight positive quarter (Kidder Mathews)
  • Industrial asking rent: $1.83/SF per month NNN (Kidder Mathews)
  • Warehouse vacancy: 6.7%, with asking rents up 8.2% year over year to $1.72/SF NNN (Kidder Mathews)
  • Notable sale: Wistron Corporation bought 48105 Warm Springs Blvd in Fremont for $120 million (Kidder Mathews)

TenantBase Industrial Activity

Demand share: 8.1% of Silicon Valley tenant searches, down from 27.3% in Q2 and 29.0% in Q1. Industrial tenants searching in Q3 averaged 1,500 to 10,000 SF on terms of three years or less.

TenantBase data vs. the market: With industrial vacancy at 4.6%, small users face a tight market and should plan their search well ahead of their move dates.

Retail Market

San Jose-area retail construction remains among the lowest of major U.S. markets for a second straight year, and vacancy is expected to keep declining, according to Marcus & Millichap. Activity-oriented tenants such as pickleball, bowling, fitness, and sporting goods concepts led many of the larger leases, with long-term commitments reported in Milpitas, South San Jose, and Morgan Hill.

TenantBase Retail Activity

Demand share: 21.6% of Silicon Valley tenant searches, down from 66.1% in Q2 and 59.9% in Q1.

Lease term preferences:

  • 3 to 5 years: 57.1%
  • Less than one year: 14.3%
  • 2 to 3 years: 14.3%
  • 5+ years: 14.3%

Space requirements: Retail tenants seeking 3 to 5 year terms averaged 750 to 1,750 SF.

TenantBase data vs. the market: Silicon Valley retail tenants on TenantBase are committing to multi-year terms for small storefronts, which fits a market with almost no new retail construction. Tenants should expect limited availability and be ready to sign 3 to 5 year leases.

Multifamily Market

San Jose stabilized apartment occupancy was 96.6% as of April 2026, with average asking rents of $3,414, up 3.6% year over year, according to Yardi Matrix data reported by Multi-Housing News.

Q4 2026 Outlook

  • Office: Expect continued recovery, with large tech leasing and rising small-tenant search demand tightening Sunnyvale and Palo Alto first.
  • Industrial: Expect tight conditions to continue.
  • Retail: Expect vacancy to keep declining with minimal new supply.
  • Multifamily: Expect high occupancy and steady rent growth.

Frequently Asked Questions

What type of commercial space are Silicon Valley tenants searching for in 2026?

In Q3 2026, office space made up 70.3% of Silicon Valley tenant searches on TenantBase, followed by retail/storefront at 21.6% and warehouse/industrial at 8.1%. Office share rose from 6.6% in Q2.

What lease terms do Silicon Valley office tenants want?

In Q3 2026, 34.6% of Silicon Valley office tenants on TenantBase sought 2 to 3 year terms, 26.9% sought 3 to 5 years, and 15.4% sought 5+ years.

Which Silicon Valley cities are tenants searching most?

San Jose was the most requested city on TenantBase in Q3 2026 by a wide margin, followed by Sunnyvale, Cupertino, Mountain View, and Palo Alto.

What is the office vacancy rate in Silicon Valley?

Silicon Valley total office vacancy was 15.9% in Q3 2026, down 160 basis points year over year, with direct vacancy at 14.1%, according to Kidder Mathews.

What is the industrial vacancy rate in Silicon Valley?

Silicon Valley industrial vacancy was 4.6% in Q3 2026, down 70 basis points from Q2, according to Kidder Mathews.

How can I find commercial space in Silicon Valley at no cost?

TenantBase matches business tenants with vetted independent tenant rep brokers across Silicon Valley at no cost to the tenant. Brokers are compensated by the landlord. Get started with TenantBase.

Sources

  1. TenantBase proprietary search data, Silicon Valley, July 1 to September 30, 2026
  2. TenantBase, Silicon Valley Commercial Real Estate Market Report, Q2 2026
  3. TenantBase, Silicon Valley Commercial Real Estate Market Report, Q1 2026
  4. Kidder Mathews, Silicon Valley Office Market Report, Q3 2026
  5. Kidder Mathews, Silicon Valley Industrial Market Report, Q3 2026
  6. Marcus & Millichap, San Jose Retail Market Report, 3Q 2026
  7. Multi-Housing News, San Jose Multifamily Report (Yardi Matrix data) (July 2026)

Disclaimer

Information in this report is aggregated from third-party sources and TenantBase proprietary platform data, and was synthesized with the assistance of AI. TenantBase search data reflects tenant activity on the TenantBase platform and is not a measure of total market leasing. All figures should be independently verified before making real estate decisions.