September 2, 2025
RE: Office Vacancy Rates and Office Space Currently Under Review with Menlo
Park City Council and Housing
https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fmenlopark.gov%2fGovernment%2fDepartments%2fCommunity-Development%2fProjects%2fUnder-review&c=E,1,6hnMhCAmG7WD5kbPHymDTIVoU7lrS_sLkE86XfKyzfdl3RK9SZLjrMbRa_6X-6SW-uxKhcFUr8INBFck06r2qvqQqVBj4DeOTbW80IIyKrO0HXDNsdF-o0UTcDc,&typo=1
Dear Justin Murphy, Mayor Combs, and City Council Members:
Attached are copies of articles in today’s Daily Journal dated Sept 2, 2025
regarding the slowdown of demand for office space and the effects on
downtowns along the peninsula. Additionally, below are the results of
today’s Google AI Search regarding Bay Area office vacancy rates.
Kindly take this into consideration as you review the four office complexes
on the City of Menlo Park Housing website as well as the development of the
SRI and USGS acreage.
Sincerely,
Rubye Cervelli
Results of Google AI Search dated September 2, 2025:
*As of July 2025, the overall Bay Area office vacancy rate was reported
at 34.8%, with San Franciscos rate also at 34.8% for the second quarter of
2025, a slight increase from the previous quarter and year. San Mateo
Countys combined office and R&D vacancy rate was 22.3% in the second
quarter of 2025. Other Bay Area cities like San Jose and Oakland are also
experiencing high vacancy rates in their downtown areas, though specific,
up-to-date figures for these cities are not readily available in the
provided results. *
*By City/Region (as of Q2 2025): *
- *San Francisco
:
34.8%*
- *San Mateo County
(Office
& R&D): 22.3%*
*Factors contributing to high vacancy:*
- *Hybrid and remote work trends:*
*A greater share of companies are downsizing office footprints due to the
tech industrys pliability to remote work. *
- *Layoffs:*
*The tech sector has experienced significant layoffs since late 2022,
contributing to empty office spaces. *
- *Shift in demand:*
*While demand for office space is present, it is driven by specific sectors
like artificial intelligence (AI) and professional services, but this is
not yet enough to offset overall vacancy. *
*According to data from commercial real estate firms for the second quarter
of 2025, Bay Area office vacancy rates vary significantly by city, with San
Francisco, Oakland, and the South Bay continuing to see historically high
rates. The San Francisco Peninsula has shown some stabilization, while the
office market in downtown Sunnyvale is performing notably well. *
*Q2 2025 Bay Area office vacancy rates by city*
*City / Submarket *
*Vacancy Rate*
*Source*
*San Francisco*
*34.8%*
*Cushman & Wakefield CBRE reported 35.1%, noting a small decline.*
*Downtown Oakland*
*~26.2%–29.1%*
*Cushman & Wakefield reported 26.2%, a quarterly increase. Colliers
reported 29.1% in downtown specifically.*
*Greater Oakland*
*23.2%–23.4%*
*Newmark reported 23.2%. CBRE reported 23.4%.*
*San Jose*
*28.9%*
*Cushman & Wakefield via https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fofficetimes.com&c=E,1,Z7CIk49v9zHRD0sxwEdABmel0-IB-Yj408FJpIO4DQhtT8Wz4TFCacN88LnRvACWd7YbPdIxWGN0woWqsqp_1SF0LyCzkb8m5MRbg-ufxNNJor60Gr69msoJ&typo=1 .*
*Silicon Valley*
*20.7%*
*Cushman & Wakefield reported an increase for the general Silicon Valley
office market.*
*Mountain View*
*30.5%*
*Cushman & Wakefield via San José Spotlight.*
*Santa Clara*
*21.9%*
*Cushman & Wakefield via San José Spotlight.*
*Peninsula / San Mateo*
*18.7%–24.6%*
*Colliers reported 18.7% for the San Francisco Peninsula/San Mateo. CBRE
reported a higher 24.6% for the Peninsula market.*
*Sunnyvale (Downtown)*
*18%*
*Cushman & Wakefield via San José Spotlight, representing a successful
downtown strategy.*
*Market context for mid-2025*
- *Persistent Struggles: San Francisco, Oakland, and the broader Silicon
Valley market have faced prolonged negative net absorption, though the rate
of increase in vacancy has slowed in some areas.*
- *Signs of Recovery: Optimism exists for future recovery, particularly
in San Francisco, where artificial intelligence (AI) companies are driving
new leasing activity. A similar trend is seen in Sunnyvale, where AI and
tech firms have fueled a strong downtown office market.*
- *Shift in Dynamics: The once-strong Peninsula market has seen vacancy
climb to a ten-year high, while San Francisco, despite its higher vacancy
rate, has shown recent quarters of improvement.*
- *Mixed Fundamentals: The market still heavily favors tenants in
negotiations due to abundant available space, but investment in the
Peninsula remains stable thanks to a solid ownership base. *
