Two EV companies are selling more than 200,000 square feet of industrial space in San Jose and the East Bay, while others are expected to be the next wave of industrial tenants in San Francisco.
Lucid Motors has sublet its 161,000-square-foot facility in Newark’s Morton Commercial Center, according to a report from Cushman & Wakefield.News lucid car’s The decision to offload the industrial space comes as the company prepares to lay off 18% of its workforce. East Bay Industrial Park sold to Terreno Realty $186 million March.
Meanwhile, Shanghai-based NIO will not renew the entire property lease on its R&D industrial property at 3200 North First Street in San Jose, according to a report from Trepp. NIO paid $22.92 per square foot for the 85,000-square-foot building and will vacate the site when the lease expires in November. Nio likely won’t leave San Jose, however, as it leases another 200,000-square-foot industrial building on Zanker Road.
While these companies are offloading space in Silicon Valley and the East Bay, electric and autonomous vehicle companies are driving industrial demand in Silicon Valley and the East Bay San FranciscoYardi’s first-quarter industrial report shows average Bay Area rents as high as $12.24 per square foot in February 2023, more than 7% higher than a year earlier and slightly ahead of the national industrial growth framework for the same period. The average signed rent over the past 12 months is even higher at nearly $13.50, compared with about $9 nationally.
“Driven by government incentives and automakers’ competition for market share, the electric vehicle industry is expected to drive growth in the industrial sector in the coming years,” reads the report.
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Overall, the Silicon Valley and East Bay industrial markets have slowed from their 2022 boom, according to Cushman & Wakefield. Sublease space now accounts for 24.6 percent of Silicon Valley and just 29 percent in the East Bay; both were below 20 percent a year ago.
Leasing activity slowed in the first quarter, with just 757,000 square feet leased in Silicon Valley. That’s less than half of the number of leases in the fourth quarter. In the East Bay, leases totaled 2.4 million square feet, the lowest level since the third quarter of 2020.
