The world's most valuable computer chipmaker is lending a boost to the Silicon Valley office market after signing a full-building lease to add to its expanding real estate portfolio.
Nvidia, one of the corporate cornerstones of the booming artificial intelligence industry, is set to soon take over the entire property at 300 Holger Way in San Jose, California, as it races to accommodate a surge in sales and hiring. The roughly 100,225-square-foot lease, confirmed by local real estate professionals with knowledge of the agreement, is scheduled to kick off in February 2025.
The lease caps off a record year for Nvidia. The company last month reported third-quarter sales of more than $35 billion, a 94% spike compared to the same period last year. The growth spurt has helped fuel Nvidia’s market capitalization to just shy of $3.3 trillion, making it the world's second most valuable company behind iPhone maker Apple.
Cushman & Wakefield has been marketing the Holger Way property for lease and represented landlord Menlo Equities in the Nvidia deal. Neither the brokerage nor the Santa Clara, California-based tech company immediately responded to CoStar News' requests to comment.
Nvidia has raced to keep up with exponential growth over the past decade as it becomes increasingly dominant in data centers, artificial intelligence, gaming, manufacturing and other segments of the tech industry. While its chips were primarily used in graphic processors and computer equipment in its early days, Nvidia's revenue has soared as demand for its products has stretched into emerging categories such as data centers and self-driving cars.
The company's expansion has translated into demand for physical office space to support its ongoing growth, fueling optimism across the real estate market that other tech giants will emerge from their own leasing hibernations to help boost the recovering office sector.
Jump-start growth
While most major cities across the country are still reeling from pandemic-induced blows, West Coast markets such as Silicon Valley, in particular, have faced steep occupancy losses in recent years as many tech companies aggressively shrunk their real estate footprints to curb expenses and redirect capital to higher priority spending.
However, recent deals among major tech companies such as Nvidia, Microsoft, Amazon and TikTok have pointed to a looming comeback.
Tech firms inked just shy of 10 million square feet of deals across the United States in the third quarter, according to a CBRE report, a continuation of the slow but steadily rising office demand throughout the industry and serving as the latest bright spot for stakeholders that have been in waiting mode for years.
The tech industry so far this year has accounted for almost 20% of the total office leasing activity throughout the country, according to the report, the largest share among any other tenant type and largely powered by growth among artificial intelligence companies.
That is especially welcome news for Silicon Valley, where tech companies contribute nearly two-thirds of the region's leasing volume. The regional office vacancy rate has soared past 16%, the highest in 20 years, as many tech giants offloaded or shrunk their previously vast real estate footprints.
While other companies retreated, Nvidia's growth in recent years has prompted a series of blockbuster leases and acquisitions. Earlier this year it purchased its Santa Clara headquarters complex for just shy of $375 million, a portfolio deal spanning seven buildings and roughly 626,500 square feet.
Between 2018 and 2022, Nvidia also developed and opened two nearby office buildings totaling about 1.2 million square feet: the Endeavor and the Voyager at 2788 and 2800 San Tomas Expressway, respectively. What's more, the company in May 2022 signed a separate full-building lease at 2421 Mission College Blvd., also in Santa Clara, to add another 103,000 square feet to its Silicon Valley footprint.