Alexandria Real Estate Equities is seeking approval from San Francisco city officials to convert 518,000 square feet of laboratory space into office space in the Mission Bay neighborhood. The move is intended to meet the increasing demand from artificial intelligence companies for office space in the area.
The proposal, which will be reviewed by the city’s Planning Commission on Thursday, covers four properties: 455 Mission Bay Boulevard South, 1450 Owens Street, 1500 Owens Street, and 1700 Owens Street. Mission Bay has experienced a significant decrease in available office space over the past two years, with availability dropping by 46 percent. This decline is largely attributed to increased leasing activity from AI firms.
OpenAI, led by CEO Sam Altman, is reportedly close to signing a lease for approximately 150,000 square feet at 455 Mission Bay Boulevard South. The company already maintains several offices in the Mission Bay area.
Alexandria’s Mission Bay Life Sciences and Technology District was first approved in 2008 and included more than 1 million square feet of office space. With most of that space now leased, Alexandria is looking to expand its total entitlement to 2.7 million square feet under the city’s cap. The current request involves reallocating existing lab space to office use rather than constructing new buildings.
Joel Marcus, founder and executive chairman of Alexandria, stated, “AI tenants now play a critical role in shaping San Francisco’s innovation economy.” The city’s Planning Department has given preliminary support to the proposed conversion.
CBRE Investment Management, in partnership with Alexandria, holds a majority stake in five Mission Bay life science buildings, including the property at 455 Mission Bay. Alexandria maintains a minority ownership interest and operates these properties.
Demand for office space from AI companies is expected to continue rising not only in Mission Bay but also throughout San Francisco in the coming months.
