Earlier this month, cloud-based data platform Snowflake announced that it will sublease a 773K SF campus in Menlo Park from Meta, the largest office lease in the Bay Area region in nearly 15 years.

The rapidly expanding data player, which has more than doubled the size of its workforce in the past two years, will take over a four-building campus at 125-135 Constitution Drive and 100-150 Independence Drive, part of the Menlo Gateway project owned by Bohannon Cos.

Last month, Cisco cut the ribbon on a new 236K SF office at 2098 Olsen Drive on the south side of the Santana Row mixed-use development in San Jose. Cisco is planning an office footprint in Santana Row to house about 3,900 employees of Cisco and its subsidiary Splunk.

The Silicon Valley office market, which has struggled this year with hefty office vacancy and availability rates, experienced a huge surge in leasing activity in the third quarter.

Leasing activity jumped to 1.7M SF in Silicon Valley in Q3 2024, rising by 1M SF over the previous quarter's paltry total of 700K SF, the first time in eight consecutive quarters the total has risen over 1.1M and the highest level since Q3 2022, Savills reported.

The office availability rate in Silicon Valley also decreased by 110 bps to 27.6% in the third quarter, down from 28.7% in Q2 2024. The availability rate in Downtown San Jose ticked down slightly to 35.2% from the 35.7% reported the previous quarter.

Amazon is taking the lead on recent return-to-office mandates by tech companies that are fueling hopes of expanding office footprints from a sector that widely embraced remote work during the pandemic.

In September, Amazon CEO Andy Jassy announced that most of the company’s employees will be required to be in the office five days per week starting in January. Since May 2023, Amazon has been operating on a three-day-a-week office mandate.

Microsoft underlined its confidence that it will continue to need a large office footprint in Silicon Valley with the $330M cash purchase in September of the 33-acre campus it occupies in Mountain View. The 640K SF campus, which can house up to 3,000 workers, was sold by Cupertino-based REIT Mission West Properties.

The return-to-office push is spurring renewed interest from investors looking to scoop up bargains in Silicon Valley office properties in prime locations that have been battered by plunging valuations.

In September, SC Properties paid $37.5M to buy the San Mateo Gateway Center, a three-building campus encompassing about 235K SF. The deal represented a discount of more than 50%. The seller, Kennedy Wilson, acquired the property five years ago for $87.5M.

While Gateway Center was about 60% occupied at the time of the sale, the new owner expressed confidence in a rebound of the office sector driven by renewed return-to-office mandates.

“We believe in the office sector on the Peninsula as a whole and already see return-to-office momentum, which will help in filling any remaining vacancy,” said SC Properties Partner Kevin Phillips, in a statement.

The AI boom, which is driving office leasing in San Francisco, also is becoming an engine for the anticipated recovery of the Silicon Valley office market in 2025.

Sridhar Ramaswamy, a former Google exec and AI expert, became Snowflake’s CEO in February. In announcing the sublease of the Meta campus this month, Snowflake said the expansion in Menlo Park was driven by the Bay Area’s status “at the heart of technology and innovation.”

Warrick Taylor, Snowflake’s VP of workplace and real estate, said in a statement that “the most data-driven enterprises, leading startups, and the best talent in the world are based here, so it’s a natural fit.”