AI Startups Drive San Francisco Office Recovery

San Francisco’s Northern Waterfront Revitalized by AI Startups

The Northern Waterfront area of San Francisco is experiencing a resurgence, driven by the influx of early-stage AI startups. For years, the area was marked by numerous vacant properties following the pandemic.

Recent activity indicates a significant shift. The San Francisco Business Times reports that five companies specializing in AI – with four having received backing from Y Combinator – have collectively leased 23,900 square feet within the Waterfront Plaza complex.

Growing AI Footprint in San Francisco

This leasing activity reflects a broader citywide pattern. AI companies represent one of the few sectors currently demonstrating expansion within San Francisco.

Data from CBRE, a real estate services firm, reveals that AI firms leased 1.6 million square feet of space last year. They now occupy a total of 5 million square feet throughout the city.

Notably, a substantial portion of this occupied space is attributed to OpenAI.

Future Projections and Potential Impact

CBRE anticipates continued growth in the AI sector. Their projections suggest these emerging startups could require up to 21 million square feet of space within the next five years.

Such expansion could potentially reduce San Francisco’s current office vacancy rate – presently at 35.8% – by as much as half.

Furthermore, this growth is expected to generate tens of thousands of new employment opportunities.

“It could fundamentally change the vibrancy of downtown,” notes CBRE analyst Colin Yasukochi.

Waterfront Plaza: A Dynamic Campus

Waterfront Plaza is comprised of five buildings, totaling 442,000 square feet. The complex’s tenant base has historically adapted to prevailing economic conditions.

Previously, WeWork was among the tenants occupying space within the Waterfront Plaza campus.