San Francisco, declared by its mayor the “the AI capital of the world,” may have the numbers to back that claim.
Since OpenAI released ChatGPT in 2022, artificial intelligence companies in San Francisco have leased more than 1.7 million square feet of offices, the San Francisco Standard reported.
The surge in leasing is fresh air to the national center of a pandemic commercial real estate crash, where Big Tech slashed its office presence by nearly half, leaving 37 percent of San Francisco’s offices vacant.
Since 2017, AI companies have leased a total of 4.3 million square feet of offices in an otherwise contracting market.
They include locally based OpenAI, with 626,600 square feet; Anthropic, with 247,735 square feet; Scale.ai, with 180,000 square feet; Hive AI, with 57,117 square feet; Hayden AI, with 41,196 square feet; and Unlearn.ai, with 17,220 square feet, according to the Standard.
“I don’t think [AI] is a bubble,” Chris Pham, senior analyst at JLL based in the city, told the newspaper. “It’s just a matter of time before it is widely adopted.”
The emerging AI industry is developing revolutionary products, drawing billions in venture capital dollars and adding workers and new office requirements.
To differentiate AI companies from the remaining tech sector, Pham’s office looked at companies whose primary source of revenue comes from AI development or machine learning. Companies with AI subdivisions, or manufacturers of semiconductors, don’t count.
Pham’s team, citing PricewaterhouseCoopers projections about how much the AI industry will add to the nation’s gross domestic product, forecasts AI companies might occupy up to 12 million square feet of offices in San Francisco by 2030.
Though AI firms could take up another 8 million square feet in the next six years, it wouldn’t begin to fill the vast array of empty offices in San Francisco.
There’s nearly 30 million square feet of total office space on the market — more than double the amount AI companies would fill under the JLL forecast.
While large companies such as OpenAI are leading the charge for bigger offices, most of the leasing activity will be in the small office segment, with seed-stage or Series A companies, Pham said.
“We can’t forget that some of these companies will fail,” Pham said. “But this [market segment] is where all the growth potential is at the moment.”
— Dana Bartholomew
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