Homegrown artificial intelligence firm Anthropic is expanding its presence in San Francisco with a new lease of 100,000 square feet at Foundry Square III. The company, led by Dario Amodei, recently secured $13 billion in Series F funding and is adding to its existing space across the street at Foundry Square IV, where it already subleases over 230,000 square feet from Slack. This expansion comes as Anthropic competes with OpenAI not only in technology but also for office space.
OpenAI remains the largest occupant among AI firms in San Francisco, leasing nearly one million square feet for its headquarters in Mission Bay. In October 2023, OpenAI subleased almost half a million square feet from Uber at 1455 and 1515 Third Street. By September of the following year, it added another 315,000 square feet at 550 Terry A. Francois Boulevard. At the opening of its Mission Bay headquarters in March, OpenAI executives stated their intention to double their San Francisco workforce of 2,000 employees.
Industry experts from CBRE estimate that more than 50,000 new AI sector jobs will be created in San Francisco and the Bay Area over the next five years. This growth is expected to reduce the city’s office vacancy rate by half as AI companies increase their office footprint from about five million to more than twenty million square feet. Currently, San Francisco has an office vacancy rate of 34.6 percent—a slight improvement from last year’s peak of 36.9 percent.
A recent report from VTS shows that demand for office space has more than doubled over the past year in San Francisco. According to data cited by the San Francisco Business Times, there has been a year-over-year increase of 107 percent in office demand as of last month and a rise exceeding 350 percent since ChatGPT was introduced publicly in late 2022.
In other local real estate news, former Apple design chief Jony Ive purchased four houses totaling $73 million in Belvedere, Marin County—three adjacent on Golden Gate Avenue and one nearby on Beach Road. The largest property sold for $43.5 million and features five bedrooms and eleven bathrooms. Ive also owns significant real estate holdings in San Francisco’s Jackson Square neighborhood and Pacific Heights.
San Francisco Mayor Daniel Lurie is proposing legislation aimed at converting vacant historic buildings into spaces usable by nonprofits, retailers, theaters, and nightlife businesses without lengthy approval processes. The plan seeks to ease zoning restrictions that currently hinder such conversions due to preservation standards or high costs.
“Adding greater flexibility for these special buildings will ensure they won’t fall into disrepair due to disinvestment,” said the Mayor’s Office regarding the proposal.
Elsewhere in the Bay Area, Menlo Park is advancing plans to convert three city-owned parking lots on Oak Grove Avenue into affordable multifamily housing combined with public parking and possibly retail or commercial uses. Four development teams—Alliant Communities, MidPen Housing, Presidio Bay Ventures, and a partnership between Related Companies and Alta Housing—have been approved to submit proposals aiming to create at least 345 residential units for low- and extremely-low-income households. Some local business owners have expressed opposition through the Save Downtown Menlo group but developers must submit their proposals by December 15.
