Silicon Valley/San Jose is a hot market for tenants and investors alike ... for now. Will the positive momentum continue?
JLL’s global research team set out to identify the fastest-changing cities across the globe in its recent
City Momentum Index report. San Jose—and the greater Silicon Valley—ranked number two. Trailing behind only London,
San Jose/Silicon Valley is deemed a city to watch due to short-term socio-economic and commercial real estate momentum, as well as its potential to foster positive change in education, innovation and the environment moving forward. That said, it's important to remember that
dynamism doesn't necessarily mean stability.
This market has
one of the fastest growing urban economies in the United States, with growth of almost five percent last year. And in an analysis of direct commercial real estate investment across global markets last year, San Jose/Silicon Valley ranked number 18.
VC funding volume in Silicon Valley was up 16 percent in 2014 from the previous year, and we don’t see any signs of wavering investor confidence. With fresh capital in their pockets, local companies have been securing new office leases—hoping that killer workspaces will attract and retain tech talent that’s in hot demand.
In fact, the
demand for well-located, high image space is so high that companies are spilling over from Palo Alto and Mountain View into Santa Clara and smaller, niche submarkets like Campbell and the San Jose Airport—where office rents have been pushed up by double-digit percentages.
To meet growing needs,
new office construction in the Valley is at its highest level since the dot-com era, with more than four million square feet under construction—and nearly 70 percent of it already preleased.
World's most dynamic city
Unemployment rate, 1% below the national average
12-month job growth, fourth fastest in the nation
Annual output is generated by “innovation industries”
High-tech VC funding in 2014, up 20.3% from 2013
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