Industrial Advanced Manufacturing and Robotics Leasing Booming in Silicon Valley
The share of industrial leasing tied to manufacturing and robotics firms is booming across Silicon Valley.
Year-to-date, the share of leasing from advanced manufacturing is 76%, well above the 15% to 50% that sector earned each year since 2018.
Meanwhile, robotics firms' portion across office, industrial, lab and flex/R&D space in the Bay Area has grown six-fold since 2021 to exceed 13.4 million square feet, according to Alexander Quinn, senior director of economic research, northwest region, for JLL.
This trend has landlords focusing more on power capacity, structure capacity and floor plans, typically with purpose-built assets.
For example, King Street Properties has leased about 9,000 square feet in its Mesa Labworks property, San Diego, to Interfacial Consultants, a life sciences firm in advanced manufacturing.
It is also positioning its Silicon Valley property, The Landing in Burlingame, for robotics, advanced manufacturing and life sciences firms.
"These tenants need more than the typical office or commercial building, starting with open, flexible floor plates and larger floor to floor height," Sonia Taneja, director of West Coast for King Street Properties, told GlobeSt.com
This also includes "key upgrades in the building's design such as structural capacity to accommodate heavy equipment and gantry cranes, loading capacity with large service elevators, and flexibility to accommodate custom venting and MEP needs as well as future upgrades," she added.
Above-average power capacity is also a significant requirement that has to meet a tenant's needs before a property is even short-listed for a tour, according to Taneja.
"These are not specs you typically see within office buildings," Taneja said.
"Our deep experience in developing purpose-built life science buildings with more robust systems, floor load capacity, loading docks, and the like, is the same playbook that accommodates these types of tenants with specialized needs."
Tajeda said that it's the design and intent that matters most and creating high-specification space for advanced manufacturing, robotics and life-science firms is significantly better when purpose-built.
"Whether it's ground-up construction or a conversion, we design buildings starting from the loading dock, through to the interior functions and amenities, and all the way to the front-entry and public experience."
The average lease term for these types of tenants is 65 months, with variance by lease size. For example, tenants needing over 100,000 square feet generally commit to over 100 months or more than eight years, on average. For leases under 25,000 square feet, the average term is 50 months.
Source: GlobeSt/ALM