Key California Markets See 92% Surge in Office Loan Originations
The surge in loan originations and venture capital investment underscores a clear vote of confidence in the future of office space?particularly in markets tied to technology and innovation, such as in San Francisco, Silicon Valley and Orange County, California, according to Avison Young.
The brokerage's Q4 2025 Office Market Overview reports that lending activity rebounded sharply in 2025, with $745.8 billion in originations, a 92% year-over-year increase. Trophy and Class A assets captured most of the new loans, underscoring lenders' flight-to-quality strategy.
Origination growth was highly concentrated in Silicon Valley (+559%) and Orange County (+127%), signaling selective confidence in tech-driven and gateway markets.
Venture Capital investment soared to $174 billion in 2025, up 27% year-over-year, with AI and tech firms accounting for 76% of funding. Nearly half of all capital ($86 billion) flowed to San Francisco.
Increased VC funding is fueling hiring and office demand in tech hubs, creating ripple effects for leasing and pricing in 2026.
"Capital is flowing to quality assets and high-growth sectors, setting the stage for a more dynamic and competitive office landscape in 2026," Danny Mangru, U.S. office Lead of market intelligence at Avison Young, told GlobeSt.com.
Mangru said that, as with the tech boom from 2014 to 2018, AI is the driving force, and West Coast markets have been the beneficiaries, particularly San Francisco, where leasing activity has surged 40%.
"How this translates into leasing activity in other high-growth markets will be worth watching in 2026," he said.
Hybrid work is the new normal for many companies, with employees targeting 2-4 days a week in the office, according to Mangru.
"Most return-to-work policies have already been enacted at this point, but vary by location and industry," he added.
Outside of venture capital, banking, finance, insurance and real estate continue to be among the main drivers of leasing activity, accounting for 20% to 30% of total leasing across most US office markets, Mangru said.
Source: GlobeSt/ALM