South Peninsula Office Market Report
The South Peninsula office market returned to normalized levels in Q1 2025, recording 736,774 square feet of leasing activity following last quarter’s historic performance.
The South Peninsula market experienced 160,028 SF of negative net absorption in 1Q25, predominantly from new available space being listed in Menlo Park especially in the non-Downtown submarkets. Palo Alto drove leasing activity in the region, representing 40% of total square footage leased. Despite Mountain View contributing 23% of total gross absorption in the South Peninsula, 68% of Mountain View鈥檚 gross absorption was from the confidential deal listed above.
South Peninsula R&D Market Report
The South Peninsula market experienced subdued leasing activity, falling below the five-year average for the first time in three quarters. Notably, gross absorption totals closely mirror those recorded in Q1 2024, suggesting this moderation likely represents a natural adjustment following three consecutive quarters of strong performance in 2024. We believe this change is a result of the fluctuations in the real estate market, rather than a lack of demand for R&D space. The South Peninsula recorded modest leasing activity this quarter, with Pacific Biosciences of California’s 190,000-square-foot lease renewal in Menlo Park accounting for 50% of the region’s gross absorption.