California’s economy had one of the fastest growth rates of all U.S. states during the first quarter of 2026, helping the state maintain its position as the fourth-largest economy in the world. Given the prevailing narrative about California’s business climate, this news may come as a surprise to many. Still, given the remarkable growth in advanced industries such as aerospace, defense, energy, and robotics here in the Bay Area that is driving much of this activity, the East Bay Economic Development Alliance (East Bay EDA) is not surprised to see these headline numbers.
The Bay Area captured approximately 79 percent of global venture capital investment in 2026, and that financial strength has been translating directly into manufacturing activity. The current boom in AI and defense-related investment is helping to fuel a new wave of manufacturing innovations and technologies that are being funded and built by entrepreneurs and innovators right here in the Bay Area. This wave of investment in new and existing companies could arguably not be coming at a better time, as many legacy manufacturing subsectors grapple with what is fundamentally a structural shift in the state’s industrial base: California has lost approximately 2,000 direct refinery jobs in the past six years, one of the direct and most visible impacts of the state’s transition to clean energy.
While some regional refineries, large-scale beverage production, and similar industries have closed or faced significant struggles, the East Bay and South Bay have both been experiencing an accelerating expansion in advanced manufacturing. This divergence illustrates a structural shift in the region’s industrial base rather than a uniform economic decline, as the advanced manufacturing, hardware, and robotics boom in Silicon Valley is creating headlines for making that region one of the best industrial leasing and development markets in the United States. However, there are also significant supply constraints in Silicon Valley for buildings with significant power capacity, which in turn helps create near-term opportunities for other cities in our region to attract new business investment all along the I-80/880 corridor: in April, the City of Richmond announced that OpenAI is leasing a 200,000 square foot property at the Port of Richmond’s Portside Commerce Center. Meanwhile, Fremont continues to be ground zero for robotics and hardware businesses seeking larger facilities, bolstered by the City’s business-friendly processes.
Education and research institutions in the Bay Area – particularly the three national laboratories in the East Bay – are the drivers of our regional economic ecosystem that has created what is arguably the most dynamic, innovative, and productive regional economy in the world today. East Bay EDA has been fortunate to have a front-row seat to various parts of this ecosystem of entrepreneurs and innovators who are shaping our region through events like our annual East Bay Innovation Awards, which brings together business, community, and elected leaders to celebrate the people leading groundbreaking businesses and organizations in our region. Running for more than a dozen years, this event has highlighted amazing companies and organizations such as Ambi Robotics, Torani, Zoox, and many others. Five years ago, we launched the Resilient East Bay project to strengthen and support East Bay manufacturing companies and work with cross-sector leaders to align investments and resources to aggregate and organize the needs and priorities of these important industries in our region.
More than thirty-five years ago, East Bay EDA came into being because senior business, community, and elected leaders made a shared commitment to come together to address our region’s challenges. Today, as we face challenges ranging from high housing costs to rapidly widening wealth gaps to strained healthcare and safety net systems to struggling transportation systems and more, East Bay EDA’s network of high-level business, community, and elected leaders stands ready to tackle them as we position our region for continued prosperity and success.
This article was originally published in the San Francisco Business Times.
East Bay EDA is a cross-sector, public-private partnership that promotes strategic economic development throughout Alameda and Contra Costa Counties and serves as the regional voice and networking resource for strengthening the economy, building the workforce, and enhancing the quality of life in the East Bay. Learn more about our work and get involved with us at www.eastbayeda.org.