Bay Area Industrial: Poster Child for the Data Center Ripple Effect
Digital infrastructure needs suppliers. Suppliers need production and storage space.
In a recent industrial outlook, Savills looked at how the expanding data center pipeline is boosting industrial demand across the U.S. And while this is true for the whole country, the paper reveals a couple of surprising outliers.
This relatively new demand driver is moving the needle most in a few smaller markets, including East Bay/Oakland in California and Salt Lake City, where data center-adjacent users made up a whopping 52.8 and 30.8 percent, respectively, of the tracked large-block industrial leasing volume. The monitored time frame spanned from the third quarter of 2024 to the second quarter of 2026.
There’s a caveat, though. Compared to primary markets such as Dallas-Fort Worth, Houston, Phoenix and Atlanta, an area like East Bay/Oakland has less overall large-block leasing activity, Chris Bauers, research manager with Savills, told Commercial Property Executive.
“A few large recent leases, including OpenAI in Richmond, MiTAC in Fremont and Hayward, and Quanta Manufacturing in Newark, make up a large share of the total,” he noted.
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One reason for these large leasing deals is the closeness to an already established base in the area, which facilitates the companies’ expansion. The East Bay also benefits from tech expertise, which supplies data center hardware.
“OpenAI and MiTAC already have a presence in the area, so expanding nearby makes sense. Many of these operations are also complex and likely need specialized labor and sector expertise, which East Bay’s established tech and manufacturing base provides,” Bauers added.
He also pointed to two significant new leases in the Union City/Fremont submarket: MiTAC’s 210,795-square-foot agreement and Quanta’s 210,000-square-foot deal.
East Bay/Oakland’s particularity is hardware supply, and it very much has exposure to data center construction slowdowns. Yet, Bauers noted, the impact on industrial will take some time to emerge and leave marks.
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