Q1 2025 Santa Clara Industrial Market Report

Market Overview

The Santa Clara industrial segment has been able to record stable vacancy in the 4 to 5% range since 2021. This comes as 518,494 square feet were absorbed throughout the past 12 months; however, absorption has been unable to keep up with new deliveries. Since 2022, Santa Clara recorded more than 1 million square feet under construction each quarter. This increased number of additions was difficult to absorb, leading to the metro recording only 640,000 square feet under construction in Q1 2025. All of the ongoing construction activity is for the specialized industrial segment, recording an asking rent of $22.97 per square foot. The Central Santa Clara submarket accounts for the most activity, with two properties under construction.

• Absorption remains most prominent for industrial facilities under 50,000 square feet.
• Flex properties record the highest asking rent at$31.19 per square foot.
• The flex segment also accounts for the most inventory, totaling 10.9 million square feet.

Rents | Vacancy | Construction

The largest property that delivered in Q1 2025 added 249,271 square feet in the Central Santa Clara submarket. The property is classified as a flex space that records a rent in the $17 to $21 per square foot range. Now, the next property underway is expected to deliver this December. The flex facility, which will be a data center, is made up of 79,500 square feet, and will include an estimated rent of $16 to $19 per square foot. While there are no other properties expected to deliver this year, another data center will be added in 2026 that totals 560,440 square feet.

As the average market rent is around $27.00 per square foot, the metro records the most expensive rents for flex properties at $31.19 per square foot. Yet, flex buildings recorded rent growth of -1.9%, while logistics and specialized properties noted positive rent growth metrics.

Rent growth changed by -0.5% year-over-year, compared to a -0.6% change across the market. 

Alameda County Sales

Over the past 12 months, there were 18 trades in Central Santa Clara, which totaled $130 million. The transaction activity led the metro to record a sale price of $406 per square foot, with flex properties noting the greatest price at $420 per square foot. In Q1 2025, Central Santa Clara recorded a total $20 million in sales with two properties changing hands. Both properties traded in March as part of a portfolio, with the facility at 3270 Jay St. selling for $14.3 million. Santa Clara also notes a cap rate of 6.2% compared to the market average of 6.3%. User-buyers account for the majority of sales, with REIT investors following behind.

Q1 2025 Sales Volume: $20M