San Jose, CA Industrial Market Report Q3 2026

Rents Rise 4.1%; Only 1.3% of Stock Is Under Construction

Demand

San Jose absorbed 690K SF in Q3 2026, against -72K SF in the same quarter last year. Vacancy is 8.6%, 54 bps looser than Q3 2025. Downtown Palo Alto is the tightest submarket at 0.0% vacancy; North San Jose leads rent growth at +5.4%. Trailing-12-month absorption of 1.17M SF compares with -150K SF a year earlier. Asking rent of $26.85/SF is up 4.1% year over year and a record.

Supply

San Jose delivered 294K SF in Q3 and 2.84M SF over the trailing twelve months (+13% versus the prior TTM period). Space under construction equals 1.3% of inventory, concentrated in Sunnyvale at 7.9% of its stock. Annual deliveries peaked at 6.18M SF in 2001. Q3 deliveries were less than half of last year’s 726K SF. The 2.61M SF pipeline equals about nine quarters of absorption at the trailing pace.

Investment Market

San Jose recorded $3.3B in sales over the trailing twelve months, +163% against the prior TTM period; Q3 accounted for $1.55B. The high-water mark in this series is $3.9B in 2021. Q3 volume is 2.8 times the prior four-quarter average. Read volume as directional.

San Jose cap rates average 6.00%. Pricing sits at $360/SF.