The artificial intelligence sector in San Francisco is juicing up local office demand.
Office leasing from AI firms is expected to accelerate in the coming months, with no break in a trendline that has seen demand from the sector more than double in the past year, the San Francisco Business Times reported, citing a new report from real estate software company VTS.
“Over the past month, in particular, we’ve seen much larger tenant demand enter the market in San Francisco, so it’s much more concentrated in that 50,000 square-foot-plus cohort,” Max Saia, head of investor research at VTS, told the Business Times. “We saw some rather large users enter the market.”
Anthropic, for example, just leased about 100,000 square feet of offices across several floors at the Foundry Square III building in downtown. That adds to its headquarters footprint of more than 230,000 square feet across the street at Foundry Square IV.
Open AI, meanwhile, has similarly been on a tear in San Francisco in recent years. In 2023, the Sam Altman-led giant subleased nearly 500,000 square feet of offices from Uber at 1455 and 1515 Third Street in Mission Bay. The following year, it picked up another 315,000 square feet next door at 550 Terry A. Francois Boulevard. As it stands, the ChatGPT creator boasts more than 1 million square feet of offices in the city.
New tenants entering the San Francisco office market have sought an average of 34,000 square feet, the Business Times reported.
“While New York showcases resilient growth within its diverse industry base, San Francisco presents an even more dramatic, tech-concentrated boom, with office demand skyrocketing since the public release of ChatGPT and the cascading demand for AI that was created,” Saia said.
As of last month, San Francisco saw a 107 percent year-over-year increase in office demand — up more than 350 percent since ChatGPT was first released to the public in late 2022, according to the Business Times.
San Francisco and the Bay Area are expected to see an influx of more than 50,000 workers in the AI sector by 2030, according to a recent report from CBRE. At the same time, office space used by AI firms is predicted to quadruple from 5 million square feet to 21 million.
— Chris Malone Méndez
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