I'm determined to program Chat GPT to have my sense of humor. Sadly, it seems to have safeguards against offensive content.
Honestly, I feel like this is a gigantic waste of time?
AI startups are resurrecting San Francisco's commercial real estate
Artificial intelligence companies made up almost one-third of leasing activity in the city in
By Laura Bratton
Feb 4, 2024
It’s no secret that like the rest of the country, San Francisco’s commercial real estate has been struggling. Vacancy rates increased as companies fled the Bay Area since the pandemic; workers have been less likely than those in other cities to be back in the office.
But one sub-sector of the tech industry is changing the terrain: AI.
Generative AI startups are exploding in San Francisco, and the volume of office space leased by AI companies surged 46% in 2023 to 3.6 million square feet, according to global real estate company Jones Lang LaSalle (JLL). Alexander Quinn, senior director of research, projects that number will rise to 12.5 million by 2030.
“It’s a counter-current to a lot of the old established tech firms that have been shrinking over the last three years,” said Quinn of AI’s growing footprint. AI companies made up nearly a third of all leasing activity in 2023, mostly due to blockbuster real estate deals from OpenAI and Anthropic, which massively expanded their footprints in the city.
JLL expects that AI firms’ share of new leases will dip slightly in 2024, but remain much larger (about 3 to 4 times higher) than pre-pandemic levels.
Why is AI descending on San Francisco?
It’s simple: that’s where the talent is. Quinn said about 20% of national AI talent is based in the Bay Area. Universities that have birthed AI leaders such as Sam Altman are located there (like Stanford University and the University of California at Berkeley).
In 2023 alone, AI chatbot startup Andi moved from Miami to downtown San Francisco. Toronto-based AI platform Cohere opened its second headquarters in the city. AI software provider Netradyne expanded its presence there.
“The Bay Area continues to draw a substantial portion of the nation’s venture capital funding, solidifying its status as a pivotal location,” Netradyne chief financial officer Tom Schmitt said last fall.
What that means for San Francisco’s economy
Economic activity in downtown San Francisco contributes to about 75% of the city’s GDP, according to city data cited by Quinn. “The more we see a resurgence of the commercial office market in the downtown, the broader impacts it has on the greater economy of the Bay Area,” he said.
AI companies renting more space will bring other businesses to the area, too. Startup accelerator Y Combinator, for example, recently moved its headquarters to the area to take advantage of its growing AI industry.