OpenAI is wrapping up a deal to sublease 455,000 square feet in two office buildings in San Francisco’s Mission Bay, the largest lease in the city since 2018.
The San Francisco-based artificial intelligence firm was in serious talks for months to take up part of Uber’s corporate hub at 1725 Third Street and finally made its decision, the San Francisco Chronicle reported, citing unidentified sources.
The maker of ChatGPT could sign a sublease with the ride-hailing company within weeks. Terms of the upcoming deal were not disclosed.
A sublease of two of four buildings that make up Uber’s 1-million-square-foot Mission Bay campus would give the Sam Altman-led company room to triple its workforce to more than 2,000 employees.
The sublease would require approval from landlords that include Uber, Pasadena-Based Alexandria Real Estate Equities and the Golden State Warriors. The approval process could add weeks more to the deal.
Closure of the OpenAI sublease would be the “most impactful single deal” in the market in years, Derek Daniels of Colliers told the Chronicle.
OpenAI set up shop in the Mission District in 2016 when it leased a 40,000-square-foot headquarters building at 3180 18th Street. In 2020, it leased a 100,000-square-foot office building at 575 Florida Street.
With its $10 billion cash infusion from Microsoft this year and the growing popularity of its ChatGPT, it’s looking to quadruple its workforce from 500 to as many as 2,000 employees, San Francisco Supervisor Ahsha Safai said at a recent hearing.
San Francisco, where tech firms during the pandemic led a shift to remote work, has one of the highest office vacancy rates in the nation at 33.9 percent, according to CBRE.
But AI companies such as OpenAI and Anthropic, which last month agreed to sublease Slack’s 230,000-square-foot headquarters at 500 Howard Street in South of Market, buck the trend.
San Francisco-based Salesforce, the city’s largest employer, owns Slack and is a major investor in Anthropic, founded two years ago by former employees of OpenAI.
Anthropic has raised more than $5 billion from investors, including $500 million tied up by FTX, the bankrupt cryptocurrency exchange. Two weeks ago, Amazon invested $4 billion in Anthropic, according to the Chronicle.
OpenAI’s potential deal would be the city’s biggest since 2018, when Facebook (now Meta) leased 755,900 square feet at Park Tower in the largest single office lease in city history.
Experts expect office vacancy in San Francisco to rise over the next year despite the recent expansion by more than a half-dozen AI firms and interest from other tech firms.
— Dana Bartholomew
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