The fear of robots replacing humans in the workforce dates back more than 100 years, and leasing numbers out this week signal we may be heading in that direction.
In the Bay Area, the robots are no longer contained within science fiction or white papers. They’re already here, and the footprint of their production is rapidly multiplying, swallowing significant swaths of commercial space across the region – according to new data which shows the sector’s leasing has increased by 15 times since 2020.
As with most commercial real estate stories coming out of the Bay Area since 2023, the surge has been driven by, you guessed it, artificial intelligence.
“Robotics isn’t a new industry, but we’re dealing with robots that want to be intelligent,” Alexander Quinn, a research analyst with JLL, told The Real Deal. “So they need to be near AI companies as well.”
Not too long ago, robotics was a niche industry. In 2020, the relative handful of robotics leases were contained within corners of San Francisco and the South Bay, and altogether took up less than 500,000 square feet. Today, the sector holds more than 220 leases, with 7.6 million square feet spread across the region, according to new data published by global real estate services firm JLL.
Thanks to AI, humanoids in the style of “The Jetsons” Rosey the Robot are in vogue. In the largest robotics lease so far this year, Tesla recently signed onto 276,000 square feet of flex office space near its Fremont Tesla factory, where it will focus on developing its Optimus robot. Boston Dynamics – whose videos of its militaristic humanoid and dog-like robots have been causing an online frenzy for years – leases an office and testing ground in Mountain View. The newer 1X Technologies has been developing its own anthropomorphic robot, Neo, out of offices in Palo Alto.
Many of the Bay Area’s robotics do not cut a humanistic shape. San Francisco-based Bright Machines’ robot was made for the uncannily meta role of physically developing data centers. Dusty Robotics in Mountain View is developing a bot that can help general contractors paint and plaster.
Regardless of appendages or face-like features, robotic companies often require something more than a typical office space. So-called flex spaces, a fairly abundant feature of the Silicon Valley region, give employers room for desks and computers, as well as research and development labs and testing grounds.
“A traditional office might have 8-to-10-foot ceilings and enough power to fuel desktop computers, but when you’re dealing with a robotics company, they need something closer to a warehouse with much more electrical power,” said Tim Vi Tran, founder and CEO of The Ivy Group, a boutique Bay Area brokerage that focuses on matching robotics firms with the right space.
He also noted that tenants prioritize access to highways, transit stops and restaurants.
AI is now a pillar of success for a robotics company, and there is no better place in the country for recruiting top AI talent. The Bay Area claims 27 percent of the country’s AI and machine learning talent share — the next densest brain claim is New York City, with 9.4 percent, according to the JLL report. In the years ahead, the region is forecast to remain the robotics hub, followed by Boston, Seattle and Houston.
Already this year, JLL reports that robotics have signed 970,000 square feet of office leases in the Bay Area. Quinn expects the region to see as much 1.5 million square feet leased by year’s end.
The typical lease runs anywhere from two to seven years, Quinn said. And companies tend to lease more space as they grow. Early stage companies typically require 13,000 square feet, while firms raising money for their series B and C often double that to 26,000 square feet. By the time AI companies get to the late stage, a 50,000 square-foot square office is typical.
Tran suspects the Bay Area is still near the beginning of its robotics craze.
“They’re popping up so fast that I can’t even keep track of them,” Tran said.