AI Hardware Demand Drives Fremont Industrial Vacancy Below 3 Percent

Intense competition among artificial intelligence hardware suppliers has pushed industrial vacancy in Fremont, California down to between 2% and 3.4%. With only six newly built industrial properties totaling approximately 1 million square feet available across Silicon Valley, overall tenant demand is outstripping supply by two to three times, driving asking rents up by as much as 10% on select properties.

Transaction activity reflects this supply crunch. Nvidia supplier Wistron Corp. is acquiring a 40-year-old industrial facility in Fremont for between $101 million and $120 million, translating to roughly $270 to $300 per square foot. Adaptive reuse is also expanding, with Sterling Organization investing $18 million to convert a former Fry's Electronics site into advanced manufacturing space. Additionally, server producer Mitac pre-leased space at the Campus at Bayside project before ground broke, while Bright Machines secured nearly 60,000 square feet in Burlingame after finding no viable expansion options in San Francisco.

For industrial developers and capital providers, AI infrastructure is creating an enduring supply bottleneck that sustains aggressive pricing and justifies adaptive reuse of older commercial and retail assets in core Bay Area submarkets.