570 El Camino Real #150-449 Redwood City, CA. 94063

New Silicon Valley Office Project Scores Tech Company Expansion as Leasing Gains Momentum

Screenshot 2023-11-07 095858

New Silicon Valley Office Project Scores Tech Company Expansion as Leasing Gains Momentum
Supermicro Expands Footprint in San Jose, California

By Katie Burke | CoStar News | PUBLISHED:

Demand for Silicon Valley office space is once again picking up speed following a pandemic-related downturn as tech companies reemerge to sign leases in office properties — even ones that have yet to be built.

Supermicro, an information technology company, signed a lease for nearly 125,000 square feet in San Jose, California, to take space at what will soon be a redevelopment project slated to replace a former Fry’s Electronics location. The deal, according to a CBRE market report, will take over a chunk of the future project at 550 to 600 East Brokaw Road in San Jose, California, in the latest sign that the widespread tech industry retrenchment could be nearing its end.

San Francisco-based firm Bay West Development obtained approvals earlier this year for plans to build a multi-building office campus spanning 2 million square feet at the Brokaw Road site, which had been the corporate headquarters for Fry’s before the retailer’s pandemic-induced shutdown in February 2021. The developer brought on global architecture firm Gensler to help design the project.

As approved, the redevelopment project involves demolishing the existing 213,626-square-foot retail property and adjacent parking structure to clear room for seven eight-story office buildings and two parking structures that can collectively accommodate nearly 5,390 vehicles, according to planning documents.

A groundbreaking date has yet to be publicly disclosed, and it is unclear when Supermicro is expecting to officially move in.

Neither the San Jose-based tech company nor Bay West Development immediately responded to CoStar News’ requests for comment.

The expansion is a boost of confidence in Silicon Valley’s office market as some of its largest occupants, including Meta and Google, have responded to a slowing economy and fears of recession by implementing widespread cuts to their vast real estate portfolios.

That has resulted in tech companies deciding to shutter office locations, sublease unwanted space, terminate prelease agreements, and walk away from future investments. Those decisions have loaded up the Bay Area’s real estate market with millions of square feet of sublease space or have downsized offices as leases come due.

While Silicon Valley’s office market has fared better than its counterpart in San Francisco, sublease space in the region has eclipsed record highs for the region. About 7.5 million square feet of sublet office space is up for grabs, according to CoStar data, a record-high figure that has pushed total availability past 19%.

For Supermicro, the new lease will be a significant expansion of the company’s real estate footprint in the Silicon Valley area. It leases roughly 1.7 million square feet in the tech-concentrated region, according to CoStar data, a portfolio that includes 13 flex, industrial and office properties scattered across San Jose and some surrounding Bay Area suburbs.

Full article: https://www.costar.com/article/896177924/new-silicon-valley-office-project-scores-tech-company-expansion-as-leasing-gains-momentum