Zoox Expands as U.S. Industrial Demand Rebounds. What Should Tenants Know?

Advanced manufacturing, robotics, and AI companies are growing rapidly in the United States, increasing demand for industrial space. Amazon-owned autonomous vehicle company Zoox recently leased more than 350,000 square feet of industrial property in California as it expands its robotaxi business.

How is this broader business expansion changing leasing demand, and what does it mean for companies looking to lease a warehouse, build a factory, or find more space?

Zoox Adds More Than 350,000 Square Feet in California

Over the past two years, Zoox has leased several industrial properties in Hayward, California. The company opened a robotaxi factory last year that plans to produce about 10,000 vehicles annually. Earlier this year, Zoox leased a roughly 34,000-square-foot vehicle staging facility near the factory. More recently, it leased two adjacent industrial buildings totaling over 350,000 square feet to provide space for its growing fleet. CoStar News

Zoox is not the only manufacturer adding industrial space near existing operations. Defense technology company Anduril leased two industrial buildings in Tustin, California, this year. It plans to use the space for centralized storage and logistics supporting its nearby headquarters and other properties. Manufacturers that expand production also need room to store components, move goods between facilities, and arrange transportation. Orange County Business Journal

U.S. Industrial Demand Is Recovering

Zoox’s expansion comes as the U.S. industrial market recovers. Net absorption reached 76.6 million square feet in the third quarter of 2026, its highest quarterly level since 2023, while the national vacancy rate fell to 6.8%. Demand has exceeded new supply for two consecutive quarters, leaving fewer properties available for lease in some areas. Cushman & Wakefield

Several factors are supporting leasing activity: domestic manufacturing growth, companies outsourcing logistics to third-party providers, and expansion tied to advanced manufacturing and data centers. Manufacturing leasing rose 27% year over year, while leasing by third-party logistics providers rose 19%, according to CBRE.

What does this mean for companies seeking a warehouse or factory?

1. Properties That Meet Modern Operating Needs May Be Harder to Find

As advanced manufacturers expand, more tenants need buildings that can accommodate equipment and automated operations. Newer properties are generally better positioned to meet those requirements. Manufacturers may need substantial electrical capacity, while e-commerce companies and 3PL Operators may focus on clear height, loading docks, and space for automated sorting equipment. Companies with firm facility requirements may benefit from starting their search earlier.

2. Older Warehouses May Offer More Room to Negotiate

Many tenants are moving from older facilities to newer warehouses with more suitable features. To retain existing tenants or attract new ones, some owners of older buildings are offering longer rent-free periods or covering part of the improvement costs.

That can create an opportunity for companies with straightforward storage needs. A business that stores boxed goods and relies on manual picking and standard distribution may not need a large automated warehouse. If an older property meets its clear-height, loading-dock, and transportation requirements, the business can consider it as a lower-cost option and negotiate concessions or more flexible lease terms.

3. Leasing Conditions Still Vary by City

Advanced manufacturers expanding in the United States often favor areas with an established industry base. Zoox, for example, has continued to expand in Hayward, where the city has streamlined permitting and offered incentives in recent years. The area is also close to Bay Area technical talent, parts suppliers, and Zoox’s existing manufacturing facilities.

Even within the same industrial region, rents and property availability can differ substantially. Average industrial asking rent is about $1.40 per square foot per month in Hayward, compared with about $1.70 in nearby Fremont and Newark. Kidder Mathews

Companies should assess each building’s features and permitted uses, then set an acceptable transportation range and compare properties across nearby cities.

What Can Tenants Negotiate Besides Rent?

Negotiating room depends on the location and property type. About 67% of companies surveyed by CBRE said more than a quarter of their leases will expire within the next three years. As those leases come up for renewal or renegotiation, some landlords may offer more attractive terms to secure or retain tenants. CBRE

If manufacturers continue to expand U.S. production, demand from parts suppliers, warehousing and transportation companies, and related service providers will remain an important trend to watch in the industrial market.

Industrial space requirements are changing, so companies need to look beyond square footage and asking rent. CUPS Realty has served businesses operating in the United States for years and has helped more than 100 companies complete commercial real estate transactions.

With property resources across major U.S. warehouse markets and a local team, we can help businesses identify warehouses or factories that fit their location, facility, and budget requirements, then assist with lease negotiations. Contact CUPS Realty to discuss your space needs.