Alexandria to Convert Labs to AI Offices in San Francisco

The artificial intelligence boom is driving a major transformation in San Francisco’s Mission Bay, with Alexandria Real Estate Equities seeking city approval to convert 518,000 square feet of lab space into offices to accommodate growing demand from AI firms.

The proposal will go before the city’s Planning Commission Thursday, the San Francisco Business Times reported. It involves four properties: 455 Mission Bay Boulevard South, 1450 Owens Street, 1500 Owens Street and 1700 Owens Street.

Mission Bay, once a dormant railyard area, has become the city’s fastest-rebounding office market. Availability of space has dropped 46 percent over the past two years, fueled by AI-driven leasing activity. OpenAI is reportedly finalizing a lease for about 150,000 square feet at 455 Mission Bay, reinforcing the properties’ appeal to tech firms.

The AI firm run by CEO Sam Altman has numerous office addresses in the Mission Bay neighborhood.

Alexandria’s Mission Bay Life Sciences and Technology District was originally approved in 2008 with more than 1 million square feet of office space. With nearly all of that now leased, the developer wants to exercise its right to request additional space under the city’s cap, up to a total entitlement of 2.7 million square feet.

The current request represents a reallocation of existing space rather than new construction.

Joel Marcus, founder and executive chairman of Pasadena-based Alexandria, emphasized that AI tenants now play a critical role in shaping San Francisco’s innovation economy. The Planning Department has preliminarily recommended approval of the lab-to-office conversion.

CBRE Investment Management, in partnership with Alexandria, holds a 75 percent stake in five Mission Bay life science buildings, including the one at 455 Mission Bay. Alexandria retains minority ownership and operates the properties.

The AI sector in San Francisco is ramping up local office demand beyond Mission Bay, with such leasing expected to accelerate in the coming months, the San Francisco Business Times reported in late September.

— Joel Russell