Fremont’s Sub-3% Vacancy Puts AI Hardware Makers in Bidding Wars
Wistron Corp., a supplier to Nvidia, is paying between $101 million and $120 million for a 40-year-old industrial complex in Fremont, California—between $270 and $300 per square foot. Only six newly constructed industrial buildings sit vacant across Silicon Valley, totaling about 1 million square feet, while tenant demand runs two to three times higher. Vacancy in Fremont’s industrial market stands at 3.4%, with some brokers pegging it closer to 2%. Asking rents have climbed as much as 10% at some projects.
Sterling Organization is spending $18 million to convert a former Fry’s Electronics store in Fremont into space designed for advanced manufacturing. Server manufacturer Mitac leased space in the second phase at Campus at Bayside before construction even started. Robotic manufacturing startup Bright Machines, backed by Nvidia and Microsoft, is leaving San Francisco for Burlingame after outgrowing 10,000 square feet and securing nearly 60,000 square feet in the North Rollins industrial district near the airport. The company couldn’t find expansion space in San Francisco.
Prologis estimates every $1 trillion in data center investment could generate 30 to 40 million square feet of additional logistics demand. AI infrastructure and advanced manufacturing are joining e-commerce as primary drivers of industrial growth, according to the REIT. Hines reports the same sectors are drawing companies to Dallas, Phoenix, and San Jose. Vince Machado, an executive vice president with CBRE, said demand tied to artificial intelligence and the companies building its hardware shows few signs of slowing after 25 years of tracking industrial cycles.
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