BXP, owner of 6.7 million square feet of offices in San Francisco, is looking to fill them up with the help of small artificial intelligence firms.
The Boston-based investor, one of San Francisco’s largest office landlords, says demand is driven by lesser-known AI firms, the San Francisco Business Times reported, citing an earnings call.
That marks a major shift from the last couple of years, when a handful of leases from top names like OpenAI, Anthropic and Scale AI defined the emerging AI boom.
“We’re seeing lists of companies, names I’ve never even heard of, that are out in the market,” Rod Diehl, an executive vice president at the firm once known as Boston Properties, told analysts.
“We’re going in the right direction. We’ll see what happens but it feels different than it did a year ago.”
Diehl pointed to some of the larger AI office deals last year, including OpenAI, which took 315,000 square feet at 550 Terry A Francois Boulevard after leasing a chunk at a former Uber building nearby.
CBRE said it’s now tracking 200 AI companies across San Francisco, which occupy 5 million square feet of offices, or nearly 9 percent of the city’s inventory.
Since 2020, no major U.S. city took a bigger hit from remote work than San Francisco, where office vacancy hovers at 36.5 percent, according to CBRE.
It could take more than a decade to swing back to the 95 percent office occupancy before the pandemic, according to the Business Times. But vacancy is possibly bottoming out.
“My message to people is that the only industry in the city, or even in the Bay Area, that’s going to improve the commercial real estate market is the tech industry,” Colin Yasukochi, an executive director with CBRE, told the newspaper.
“It’s the only one that has enough growth potential to fill the millions of square feet of office space.”
The city saw positive absorption in the fourth quarter ending in December, the first time in five years. Startups growing their footprints will create at least 400,000 square feet of future positive absorption, when more offices are leased than vacated, according to JLL.
BXP executives were optimistic they could lease more offices at some of its largest properties, including the 4.8-million-square-foot Embarcadero Center, and 535 Mission, which have had high vacancy.
“The leasing excitement on the West Coast in (2024) continues to be growth from AI organizations in the city of San Francisco,” BXP President Doug Linde told analysts.
— Dana Bartholomew
Read more
Residential
San Francisco
AI founder allegedly swindled investors out of $60M, bought SF homes
Will DeepSeek eclipse the “AI Capital of the World”?
Tech office leasing jumps 17% in SF, half driven by AI firms
Copyright for syndicated content belongs to the linked Source link
