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SAN JOSE, CA-Analysts at Boston-based Colliers International are predicting that the Silicon Valley sub-market, with strong real estate fundamentals in place, should hold up well in what is expected to be a weaker 2001.

In a third quarter report targeting the area, the national commercial developer says, despite expectations for an economic slowdown, the vacancy rate here plunged from 3.97% in 3Q99 to a razor-thin 1.17%.

Colliers is unconcerned about the 13.35 million in new construction starts in Silicon Valley during the first three quarters of this year, saying, “demand exceeds current supply,” with built-to-suit comprising 25% of the new activity, and pre-leasing of 5.97 million in place on speculative construction. Another 11.3 million sf of speculative construction should be added to the market in the next year.

On existing commercial properties, gross leases in the third quarter hit 5.51 million sf, bringing the year-to-date total to 30.41 million sf. Net absorption added up to 1.4 million sf, for a three-quarter aggregate of 12.03 million sf.

In looking forward to 2001, Colliers, which participates in this market, says Silicon Valley “boasts a robust local economy in an economically vibrant state,” citing reports of prosperity, low unemployment and high personal income. This is “where it’s at” for companies entering high-tech and Internet markets.

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