Final answer:
The late 1990s saw high demand and rents for office space in San Jose due to the tech boom. A recession in 2001 led to falling rents, but by 2005, as employment rose, rents increased again. The area's growth was facilitated by factors unique to the cultural and economic environment of Silicon Valley.
Step-by-step explanation:
During the late 1990s, San Jose, often associated with Silicon Valley, experienced a high demand for office space, accompanied by significantly high rents. This demand was driven by the booming high-tech industry in the area, characterized by high-skill information sector jobs which often offer good pay, solid benefits, and contribute to a higher quality of life. Nevertheless, the national recession that started in March 2001 severely impacted the market for office space in San Jose, causing rents per square foot to fall.
By 2005, with the slow rise in employment numbers in San Jose, office space rents began to once again increase. This change can be attributed to the economic recovery and the growth of the technology sector in the region, which did not see new office space being built during the downturn period. The history of Silicon Valley's rise as the high-tech capital includes pre-existing aerospace and defense industries, partnerships with local universities, such as Stanford, and a pool of venture capitalists. The unique cultural climate of California also played a significant role in attracting and nurturing high-tech innovation.
The leverage cycle and the burst of the housing bubble in the mid-2000s illustrate the sustainability issues of rapid price growth, which also resonated with office space demands in technology hubs. Other regions like the "128 Corridor" near Boston, Austin, Texas, Seattle, Washington, and Ireland-Dublin have also emerged as centers for high-tech innovation and have experienced similar economic cycles.