Another AI Company Leases Space in Silicon Valley

Another artificial intelligence company is growing with a sizable lease in Silicon Valley.

San Jose-based AI chip startup Etched inked a lease for 80,000 square feet in Milpitas, marking one of the largest research and development leases in Silicon Valley so far this year, the San Francisco Business Times reported. Details of the deal, including lease terms and location, were not disclosed.

AI leasing in Silicon Valley is picking up speed as giants like OpenAI and Anthropic grow their presence in San Francisco to the north. AI infrastructure and advanced manufacturing startups leased 1.1 million square feet in the second quarter, marking a 36 percent increase from the prior quarter and a 21 percent jump from the same period last year, per Kidder Mathews data cited by the Business Times.

AI companies like Databricks have been leading the way in leasing in the region. Earlier this year, the software firm leased 180,400 square feet in Sunnyvale, adding to its more than 450,000 square feet leased in the South Bay city in the past year alone.

Even though leasing in Silicon Valley grew in the second quarter, R&D vacancy in the region rose to 11.7 percent, according to Kidder Mathews data. Net absorption was negative 232,800 square feet in the first half of this year — a turnaround from negative 1.2 million square feet in the same period last year.

Altogether, companies in Silicon Valley are seeking 12 million square feet of industrial space, with many of those users having large power requirements, CBRE Executive Vice President Matthew Taylor told the Business Journal. While today’s automated factories and AI hardware operations often require buildings with 4,000 amps or more, many older properties were built with roughly 2,000 amps of electrical service.

“Everyone needs power; they need it today, and unfortunately the infrastructure was not built and invested in over the last 10 years,” Taylor said. “That’s never been more of a problem than it is today.”

— Chris Malone Méndez