The AI Boom Is Redefining San Francisco’s Office Market
Artificial intelligence may be the driving force behind San Francisco’s office revival—but it’s not lifting every building equally.
According to CBRE, tenant requirements—meaning the total square footage companies are actively seeking—hit a record 7.9 million square feet in Q3 2025, fueled largely by AI startups. Yet for many landlords, the challenge isn’t finding tenants; it’s understanding what kind of space these new companies actually want.
AI Tenants Think (and Lease) Differently
Unlike the tech giants of the past decade that filled skyscrapers with long-term leases, today’s AI tenants are younger, faster-growing, and more flexible.
“They want shorter-term, more affordable, furnished space,” said BXP President Doug Linde during a recent earnings call. “The AI demand is not a tower business.”
In other words, AI firms aren’t moving into traditional towers like Salesforce or Embarcadero Center. Instead, they’re gravitating toward SoMa’s low- and mid-rise buildings—places like 680 Folsom Street, where flexible floorplates and creative layouts support rapid scaling.
The building, owned by BXP, currently sits 59% leased and already houses tenants like Zip, which subleased 75,000 square feet earlier this year. With more space becoming available as legacy leases expire, it’s exactly the kind of environment that fits what AI companies are after: immediate occupancy and room to grow.
Landlords Are Adapting Fast
For decades, San Francisco’s office scene was built on long-term, high-value leases. The AI boom has flipped that playbook.
Landlords such as Kilroy Realty are now pre-building speculative suites—fully equipped and move-in ready, even before signing a tenant. That strategy paid off in Kilroy’s recent 93,000-square-foot lease with Harvey AI, a legal-tech firm that needed space immediately.
“The key is near-term occupancy,” Kilroy CEO Angela Aman explained. These companies often outgrow their offices within months, forcing landlords to deliver both speed and scalability—two traits that define the modern AI economy itself.
A Selective Market Surge
While San Francisco’s overall vacancy rate still hovers above 34%, that figure hides a striking split: prime, built-out space is tightening rapidly. Much of the city’s sublease inventory—like former Zendesk and Meta offices—has already been “picked through,” according to CBRE’s Colin Yasukochi. The next wave of leasing is expected to happen directly with landlords, not sublessors.
SoMa, in particular, remains the epicenter of AI’s real estate footprint. From Harvey AI at 201 Third Street to Brex at 270 Brannan, the neighborhood’s creative infrastructure and proximity to top engineering talent continue to attract companies at the forefront of innovation.
The Bottom Line
San Francisco’s recovery isn’t being led from the top floors of towers—it’s being rebuilt in the adaptable, innovation-driven spaces south of Market Street.
As AI continues to blur the lines between tech, biotech, and advanced research, the city’s most responsive landlords are realizing that the future of commercial real estate is about flexibility, not floor count.
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