South Bay office rebound driven by AI leasing boom

The South Bay office rebound is gaining speed as artificial intelligence and tech companies fuel a sharp increase in leasing activity across Silicon Valley.

During the first quarter of 2026, companies signed major office deals that helped reduce available space and revive a market still recovering from the pandemic slowdown.

According to a report from Savills, the region recorded 3.2 million square feet in office leasing, the highest level since the end of COVID-19 disruptions.

That figure more than doubled the 1.5 million square feet leased in the previous quarter.

Major deals drove the surge. OpenAI leased roughly 439,000 square feet across multiple buildings in Mountain View. Meanwhile, Infineon secured over 219,000 square feet in North San Jose.

Availability declines but remains elevated

The South Bay office rebound also reflects a gradual drop in available space.

• Availability fell to 22.6% in Q1 2026
• Down from 24% in Q4 2025
• And significantly lower than 26.8% in Q1 2025

This metric includes vacant offices, subleases, and spaces expected to be vacated soon.

Although the decline signals progress, availability remains historically high. As a result, experts say the market still needs time to fully stabilize.

Tech giants expand across Sunnyvale and San Jose

Several high-profile companies expanded their footprints across the region, reinforcing the South Bay office rebound trend.

Databricks leased multiple offices in Sunnyvale, including 200 and 250 West Washington Avenue, plus an additional 180,400 square feet nearby.

CrowdStrike took 150,000 square feet in downtown Sunnyvale, while Pinterest secured nearly 125,000 square feet in the same city.

In North San Jose, Astera Labs expanded with a 69,800-square-foot lease.

Even with strong leasing activity, analysts caution that the recovery is still in progress.

Savills noted that while demand is rising, the office market has not yet reached full balance.

However, the surge in AI-driven expansion offers a clear signal: the South Bay office rebound is real—and technology companies are leading the way.