Artificial intelligence may be boosting San Francisco’s office market, but a well-known name in the sector signed a sizable deal in Manhattan.
OpenAI, the firm known for its ChatGPT chatbot, is leasing 90,000 square feet at Kushner’s Puck Building in Soho, the Wall Street Journal reported. Details of the deal, including asking rent and term, were not disclosed.
The hot artificial intelligence sector offers a potential boost to commercial real estate owners, with frims like Anthropic and Palantir, signing for space in markets like New York, Seattle Denver and Atlanta.
But AI is closely linked to the performance of San Francisco’s office market. The “AI capital of the world,” as proclaimed by Mayor London Breed, is home to 1.7 million square feet of office leases in the sector since ChatGPT’s origin in 2022. Firms in the city could occupy 12 million square feet by 2030, according to a forecast by PricewaterhouseCoopers.
The industry is emerging with unique products, bringing in billions of venture capital dollars and adding workers and office requirements.
Altman’s OpenAI is leading the charge. Last month, the company leased an entire six-story building in San Francisco’s Mission Bay neighborhood, the city’s largest office lease of the year. It also subleased two buildings from Uber in the city last year and is expected to announce more office openings soon.
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Manhattan office tenants signed deals for 23.1 million square feet in the third quarter, a 25.1 percent jump year-over-year, according to Avison Young. The vacancy rate dropped to 18.7 percent in the third quarter, the first time the quarterly rate fell below 19 percent since the first quarter of 2021.
Office space covers seven floors of the Puck Building, which also includes half a dozen penthouse condominiums. Office tenants include Cadre, Plaid and Thrive Capital, a venture capital firm that backs OpenAI. Last year, United Kingdom-based hedge fund Quadrature signed a lease at 295 Lafayette Street for 30,000 square feet.