There’s one bright spot for San Francisco’s office space market

San Francisco – In recent years, the image of San Francisco as a place of reception for companies has taken a hit.

Large technological companies such as Dropbox and Salesforce have reduced footprints in the city as a sub-jack of offices, while retailers such as Nordstrom and Anthropology got out of the city center. Social media X, formerly Twitter, has left its head office in the middle of the Texas market, after the owner Elon Musk complained of “dodging violent drug addicts just to enter and get out of the building”.

While the city remains on the defensive, a positive point was a boom of startups of artificial intelligence.

The rate of vacation rate of 35.4% of San Francisco in the first quarter – among the highest in the country – should drop one to three percentage points in the third quarter thanks to the expansion or the opening of new offices in the city, according to the real estate brokerage company JLL. The last time that the San Francisco vacancy rate fell was in the fourth quarter when it decreased by 0.2% – the first time from the COVVI -19 pandemic, according to JLL.

“People wanted to count us, and I think it was a bad bet,” said Mayor Daniel Lurie. “We see all this because the ecosystem is better here in San Francisco than everywhere else in the world, and it is really an exciting period.”

Five years ago, AI leases on the San Francisco commercial real estate market were relatively sparse, with only two leases in 2020, according to JLL. But that has since climbed to 167 leases in the first quarter of 2025. The Bureau’s footprint for AI companies also increased, representing 4.8 million square feet in 2024, compared to 2.6 million in 2022, said JLL.

“You need the talent base, you need the entrepreneur ecosystem, and you need the VC ecosystem,” said Alexander Quinn, principal director of economic research in the North West JLL region. “Thus, all these three things exist in the region of the big bay, and this allows us to be the clear leader.”

AI companies are attracted to San Francisco due to the concentration of talents in the city, analysts said. The city is home to AI companies, including the manufacturer of Chatgpt Openai and Anthropic, known for the Chatbot Claude, which in turn attracts companies that wish to collaborate. The Bay region also houses universities that attract entrepreneurs and researchers, including UC Berkeley, UC San Francisco and the University of Stanford.

Capital venture companies are paying money into AI, food for food and staff growth. Openai won the last quarter of the largest venture capital agreement in the world, raising $ 40 billion, according to the CB Insights research firm.

Openai rents approximately 1 million square feet of space in five different places in the city and employs around 2,000 people in San Francisco. The company earlier this year opened its new headquarters to Mission Bay, renting the Uber space.

OPENAI began as a non-profit research laboratory in 2015 and those involved found their way to San Francisco for the same reason why the previous generations of technologists and people pushing the border in the United States are attracted by the city, said Chris Lehane, vice-president of global affairs in Openai in an interview.

“It is a place where, when you turn off an idea, no matter how crazy it may seem to be at the time, or how little it may seem likely … San Francisco is the city where people do not say:” It’s crazy “,” said Lehane. “They say:” It’s a really interesting idea. Let’s see if we can do it. »»

The interior of the new OPENAI headquarters in San Francisco in the Bay mission district. (OPENAI)

Databricks, worth $ 62 billion, also develops in San Francisco. In March, Databricks announced that it would move to a larger space in the financial district next year, which increased its office footprint to 150,000 square feet and more than doubled by its San Francisco staff in the next two years. He undertook to hold its annual data of data + AI in the city for five more years.

The company holds 57,934 square feet in its current office in San Francisco near the Embarcadero, according to Costar, which follows real estate trends.

“San Francisco is a real talent magnet for the talent,” said the co-founder and vice-president of DataBricks engineering. “It’s a beautiful city for people to live and work and we really follow where the employees are.”

Several years ago, Wendell said his business was planning to develop in San Francisco. At the time, it was not clear if people would return to offices after the pandemic, and some companies raised concerns about the safety and cleanliness of the streets of San Francisco. Wendell said his company had decided to invest more in the city after obtaining insurance from city leaders.

“People see an administration that focuses on public security, clean streets and the creation of conditions which also indicate that we are open to business,” said Lurie, who beat the outgoing mayor London Breed last November by campaigning public security. “We said from the first day, we must create the conditions of our arts and our culture, for our small businesses and for our innovators and our entrepreneurs to prosper here.”

Laurel Arvanitidis, Director of Affairs Development of the San Francisco Economic Development and Work Office, said that the city’s policy and tax reforms have helped attract and keep businesses in recent years, including an office tax credit which grants a credit of $ 1 million for companies that are found or travel to San Francisco.

Lurie announced on social media on Thursday that Cryptocurrency Exchange Coinbase opens an office in San Francisco after leaving the city four years ago.

“We are delighted to reopen an office at SF,” wrote Brian Armstrong, Coinbase Director of Coinbase, in response to the mayor’s social media. “Still a lot of work to do to improve the city (it has been so badly managed for many years), but your excellent work has not gone unnoticed, and we appreciate it greatly.”

Nvidia, based in Santa Clara, is also looking for an office space in San Francisco, according to a person familiar with the question that refused to be appointed. The news was reported for the first time by San Francisco Chronicle. Nvidia, which also has Californian offices in San Dimas and Sunnyvale, refused to comment.

“It is because of the AI ​​that San Francisco is back,” said the CEO of Nvidia, Jensen Huang, last month on the Podcast Hill & Valley Forum. “Above everyone has evacuated San Francisco. Now, it’s again prospered.”

But San Francisco still has some challenges to come, while businesses continue to push workers to return to the office. Although the street environment has improved, it will be essential for the city to maintain progress.

Lurie said that his administration had inherited the greatest budget deficit in the history of the city and that they must master. The task of his administration is to ensure that the streets and public spaces are clean, safe and welcoming, he said.

“We have work to do, there is no doubt, but we are an increasing city, for sure,” said Lurie.

The staff editor Roger Vincent contributed to this report.