Astera Labs offers purpose-built connectivity platforms focused on high-speed data transfer for AI and cloud infrastructure, allowing massive amounts of data to be transmitted between an array of connected chips. The company had an IPO in March and is valued at nearly $20B.

The company’s growth is being fueled by the rapid evolution of AI models, which now are scaling up to trillions of parameters and require cloud-based platforms that can exponentially ramp up computational capacity.

Astera’s HQ deal is the latest in a string of large Silicon Valley office leases signed by leading AI players.

Earlier this month, Nvidia signed a lease for a 102K SF building at 300 Holger Way in San Jose. The AI chip giant continues to expand its leasing footprint after purchasing its Santa Clara headquarters complex in May for $374M in a deal that included 2M SF of development rights.

Cloud-based data platform Snowflake announced this month that it will sublease a 773K SF campus in Menlo Park from Meta, the largest office lease in the Bay Area region in nearly 15 years.

The rapidly expanding data player, which has more than doubled the size of its workforce in the past two years, will take over a four-building campus at 125-135 Constitution Drive and 100-150 Independence Drive, part of the Menlo Gateway project owned by Bohannon Cos.

The AI boom, which is driving office leasing in San Francisco, also is becoming an engine for the anticipated recovery of the Silicon Valley office market in 2025. San Jose is aggressively courting AI companies to set up shop in its downtown.

Mayor Matt Mahan is working with real estate developers, tech companies and San Jose State University on the creation of AI incubators to breed startups in the city. Mahan has sent a memo to city agencies urging them to make it easier for AI companies to set up shop in San Jose, with discounted utility rates and speedier permit processing.

Sunnyvale-based Plug and Play this fall began operating an AI startup incubator at the vacant former Bank of Italy building on South First Street in San Jose. The startup accelerator is getting the space rent-free for three years, according to a report in GovTech.

Plug and Play, which will manage the daily operations of the incubator and may invest in some of its startups, expects up to 20 total startups to come through the incubator in two yearly batches.

The utility PG&E announced in June that it will invest $350,000 to help fund the incubator, known as the Center for AI Excellence. Corporate partners of the incubator will have input in choosing startups for the program and will potentially get early access to the technology they are working on.

The Silicon Valley office market, which has struggled this year with hefty office vacancy and availability rates, experienced a huge surge in leasing activity in the third quarter.

Leasing activity jumped to 1.7M SF in Silicon Valley in Q3 2024, rising by 1M SF over the previous quarter's paltry total of 700K SF, the first time in eight consecutive quarters the total has risen over 1.1M and the highest level since Q3 2022, Savills reported.

The office availability rate in Silicon Valley also decreased by 110 bps to 27.6% in the third quarter, down from 28.7% in Q2 2024. The availability rate in Downtown San Jose ticked down slightly to 35.2% from the 35.7% reported the previous quarter.