AI Demand Signals a Potential Turning Point for SF’s Office Market

Could artificial intelligence be the key to stabilizing SF’s record-high vacancy rates?

San Francisco’s office market may finally have a tailwind—and it’s coming from artificial intelligence. According to new analysis from CBRE and reporting by GlobeSt, AI companies are projected to lease up to 16 million square feet of office space in the city by 2030. That breaks down to roughly 2.7 million square feet annually—a pace that could significantly reduce vacancy and reignite confidence in the market.

A Sector Backed by Serious Capital

Since 2020, San Francisco’s AI startups have raised an impressive $103 billion in venture capital—nearly half of the $239 billion invested in AI nationwide. That level of funding is already translating into office demand: AI companies have leased more than 5 million square feet of space in San Francisco over the last five years.

History Repeating—With a Twist

CBRE draws comparisons to previous tech booms that reshaped the city. During the dot-com rise (1995–2001) and mobile tech surge (2008–2019), office leasing soared and vacancy rates dropped as low as 1% and 4%, respectively. But these cycles also came with a hard landing—surges in supply, followed by waves of excess space when the markets cooled.

Today, vacancy stands at a historic high of 35.8% (Q1 2025). The promise of AI offers a familiar hope—but with new variables in play.

Efficiency Meets Expansion

While the outlook is optimistic, it comes with caveats. Unlike previous tech booms, today’s AI companies are often more efficient in their space usage. Automation, hybrid work strategies, and leaner teams may mean they don’t need as much square footage as their predecessors. Still, AI teams are increasingly valuing in-person collaboration, particularly for research-intensive work—potentially driving targeted growth in select submarkets.

A Look Ahead

If AI leasing projections hold, San Francisco’s office vacancy could fall to around 16% by 2030—a dramatic shift that would bring new life to the city’s commercial core. However, CBRE cautions that broader job growth beyond the AI sector will also be critical. Relying solely on one industry may not be enough to absorb the existing oversupply.

The Bottom Line

AI is not a silver bullet for San Francisco’s office market—but it could be a catalyst. With $103 billion in funding already fueling growth and an estimated 16 million square feet of leasing on the horizon, the sector has the potential to transform demand in the years ahead. Whether that potential is realized will depend on how the market adapts—and how much momentum the AI wave can sustain.