SF Union Square Vibrancy Draws Another AI Office Lease

San Francisco’s Union Square is bouncing back as a hip and affordable office option compared to other parts of the city, as artificial intelligence companies drive leasing.

Chalk, a data platform for AI and machine learning, leased 15,000 square feet of office space at 55 Stockton Street, the San Francisco Standard reported.

The move into the seven-floor mixed-use building increases the company’s space from 4,500 square feet in the Mission District. Terms of the lease, including length and monthly rate, were not disclosed.

The company landed on 55 Stockton after touring other spaces and realizing the convenience and environment of Union Square made it an ideal location to plant a flag. Proximity to BART, Muni and gyms were “a big priority for a lot of people on the team,” Chalk CEO Marc Freed-Finnegan told the outlet.

Union Square is making a comeback after retailers and office tenants fled during the pandemic.

“This part of town went from really vibrant to being really not a fantastic part of the city, but it’s once again in a really good spot,” Freed-Finnegan said.

Still, 55 Stockton Street lost ground-floor tenant Nespresso last month, and the main retail space has been vacant since May 2023 when Coco Republic closed after less than a year.

The Union Square neighborhood offers lower rents than downtown, per Cushman & Wakefield. Average asking rent in Union Square is $54 per square foot compared to $70 in the Financial District.

“This market is taking off right now,” said Avison Young broker Colton Hanley, who recently found a Union Square office for AI company Kaizen. “It has cool, creative, cost-efficient spaces, in a safe neighborhood — and they’re moving fast.”

Demand for office space in San Francisco has surged in tandem with the AI boom.

Businesses overall sought 7.9 million square feet of office space in San Francisco last quarter, an all-time high for office demand in the city.

Giants like OpenAI and Anthropic have been expanding their San Francisco operations, while fledgling startups have been carving out nests in the city and across the Bay Area.

— Chris Malone Méndez