North Peninsula Office Market
The region recorded its second consecutive quarter of negative absorption, with 366,000 SF in the first quarter of 2025鈥攄riven primarily by Snowflake placing its former 210,000-SF San Mateo headquarters on the sublease market. Gross absorption totaled 724,000 SF, marking a 49.0% decline quarter-over-quarter and a 25.0% drop year-over-year. Until transaction volume stabilizes, landlords may face challenges in achieving higher asking rents. Market-wide vacancy increased to 19.5%, up from 18.5% the previous quarter. Sublease vacancy edged up to 4.0% from 3.8% over the same period. The total average asking rate closed the quarter at $6.02/SF Full Service, down from $6.13/SF in the prior quarter and $6.18/SF one year earlier.
North Peninsula Industrial Market
Market-wide R&D availability rose to 29.6% this quarter, up from 27.5% in the previous quarter. R&D vacancy also increased, reaching 28.5%, compared to 25.3% in the same time frame. In contrast, market-wide industrial availability decreased to 7.0%, down from 7.5%, while industrial vacancy decreased to 5.4%, compared to 5.7% in the prior quarter. The region鈥檚 R&D pipeline currently includes 2.0 million SF of under construction product, with 11.0% preleased. Industrial construction activity remains inactive. Industrial and R&D sales volume fell to $19.5 million in the first quarter, marking a 57.7% quarter-over-quarter decrease and a 64.7% drop year-over-year.