Industrious Grows San Francisco Financial District Space

Coworking company Industrious is growing its San Francisco Financial District outpost in the latest vote of confidence in the demand for downtown offices.

The CBRE-backed firm is leasing an additional 17,100 square feet at 345 California Street, bringing its total footprint to approximately 50,500 square feet on the sixth, seventh and eighth floors of the 35-story office and hotel tower, the San Francisco Business Times reported. The company plans to have the space fully built out by mid-February.

The booming artificial intelligence sector has helped inject new life into the recovering San Francisco office market. AI giants like Anthropic and Nvidia have been grabbing additional space, as have other firms like Sierra and Postman. Overall, approximately 30 percent of office demand last quarter was from AI companies.

“AI is hot right now,” Peri Demestihas, head of North America real estate for Industrious, told the Business Times. “But not all of this is AI-related.”

It’s not just in San Francisco that Industrious is growing.

Last month, it leased nearly 19,800 square feet at 220 Park in Burlingame on the San Francisco Peninsula in an effort to reach workers closer to home. “There’s a lot of coworking in San Francisco and a fair amount in Palo Alto, but nothing in Burlingame,” Demestihas told the Business Times last month. “It’s a pocket filled with folks who say, ‘I don’t want to go into San Francisco or Palo Alto. I want to live and work here.’”

Unlike the formerly bankrupt WeWork, Industrious has homed in on selective expansions and high-quality locations rather than unfettered growth. CBRE invested in Industrious in 2020 and bought the remaining stake this year in a deal placing the coworking company at about $800 million. CBRE CEO Bob Sulentic believes Industrious can attract workers as companies adapt versatile return-to-office strategies.

“I think we’re beyond a return to the office,” Sulentic told investors earlier this month. “The leasing markets are back.”

Other Industrious locations in the Bay Area include outposts in San Francisco, Palo Alto, Concord and Walnut Creek.

On the AI front, San Francisco hosts 6.8 million square feet of AI-focused offices, per CBRE data noted by the Business Times; AI companies have leased another 6 million square feet in Silicon Valley. Still, the office vacancy rate in San Francisco remains at 31 percent, according to Colliers data cited by the Business Times.

— Chris Malone Méndez