AI Startups Boom Is Helping San Francisco Real Estate Office Market

SV Proptech Editorial

What do Artificial Intelligence (AI) and commercial real estate office space have in common? AI already has numerous applications in commercial real estate, from data analysis, pricing strategy to property management and assets performance efficiency.

But AI companies also seem to come to rescue the embattled San Francisco office rentals market, which has a reported vacancy rate of over 30%, depending on statistics reporting.

Since San Francisco is a perpetually reinventing city, this is no different. Once again, San Francisco Bay Area emerges as a global hub for Artificial Intelligence innovation. San Francisco Mayor London Breed declared the city the ‘ the AI Capital of the World’. Venture Capitalists have funded AI startups in the amount of $2 billion this half year alone.

Since 2019, there have been more than 500 venture capital deals among AI companies in San Francisco, amounting to a total of $17.7 billion in funding.

According to CRBE, those hundreds of companies grow, many founders are starting to look for office space so they can collaborate in person and have a space to bring in potential new clients.

While big, established tech giants such as Salesforce, Meta and Google continue to shed office space and are laying off employees in San Francisco, Ai startups represent 30% of new office leases, proving a much needed counter balance.

According to the San Francisco’s Office of Economic and Workforce Development of the top 20 AI companies by dollars raised, 16 are in the Bay Area and 11 are in San Francisco, according to. The San Francisco-based companies have together raised $15.7 billion and employ an estimated 3,400 people, per office statistics. Along with OpenAI, other companies in San Francisco include Hive, Tome, Anthropic, Scale AI and Dialpad.

Last month, Hive subleased 60,000 square feet at 100 First Street, in the Financial District, for undisclosed terms. The cloud-based AI firm now occupies 20,000 square feet at 575 Market Street.

San Francisco Business Times Journal reported that the Hive’s sublease marks the largest AI deal since OpenAI leased nearly 100,000 square feet in the Mission District in late 2020.

In June 2023 Tome leased 17,000 square feet at 600 Townsend Street and Chef Robotics leased 11,000 square feet at 976 Mission Street in April this year. A report released by JLL last month states that Artificial intelligence firms now lease offices in 80 buildings in San Francisco. They include OpenAI, Github, Cruise, a self-driving car company; and Niantic Labs, creator of the augmented reality mobile game Pokemon Go.

Other AI companies are expected to open offices in San Francisco, in search of local and establish talent and taking advantage of largely available and negotiable office space.

Sources: San Francisco Business Times, TheRealDeal,

CRBE, JLL