San Francisco’s commercial market saw some signs of life this week, with two new artificial intelligence leases and the welcome news that San Francisco finally ditched its last-place return-to-office ribbon.
For the first time since Placer.ai began tracking office visits in the early days of the pandemic, San Francisco has bested another major U.S. city in RTO figures. The city had 47.5 percent fewer office visits in February 2025, compared with the pre-Covid month of February 2019, while Chicago saw a 48.5 percent decline in the same time period, according to Placer.ai office data.
“There are green shoots everywhere in San Francisco, and these numbers are an early indication that we are moving in the right direction,” Mayor Daniel Luire, who recently set an April 28 deadline for city workers to be in-office four days a week, told The Real Deal. “Our administration is leading by example, and many of our partners in the private sector are on the same page, bringing workers back to the office and kickstarting our downtown recovery.”
San Francisco Chief Economist Ted Egan cautioned that Placer.ai’s data “shows a lot of volatility” from month to month, and is just one indicator of RTO strength. But combined with other data points, like increased transit ridership and office demand, it adds up to “good news for the city’s continuing economy recovery,” he said.
There were 2.2 million square feet of office leased in San Francisco in the first quarter of 2025, according to early data from CBRE, slightly less than the fourth quarter of 2024 but 50 percent higher than the full first quarter of 2024. If San Francisco continues on this leasing trajectory, it will exceed the 8 million square feet leased in all of 2024, according to Colin Yasukochi, executive director of data for CBRE.
There were about 5 million square feet of office requirements in the first quarter, which is lower than previous quarters, but represents the highest level of company expansions since the pandemic at just over 20 percent of the total. Almost all of that demand is coming from the 30 AI companies which are seeking a combined 1 million square feet of office space in the city, Yasukochi said.
Two AI firms sign leases at 501 Second Street
The Swig Company scored some of that coveted AI attention, announcing two leases with AI firms this spring.
LangChain, an open-source framework for building applications using large language models, is taking 11,800 square feet in the seven-story 200,000-square-foot former warehouse, while unitQ, an AI-enabled product quality and user experience analytics platform, has signed on for 7,500 square feet.
Blake Walker and Caroline O’Loughlin Livermore of CBRE represented LangChain. Walker said LangChain would be moving into a furnished space, which “minimized disruption” so they could focus on their business and give their team “an office they enjoy coming into.”
“The decision to move to 501 Second Street was driven by favorable economics, term flexibility, and a high-quality workspace that supports their growing team,” he said.
Cory Kristoff, Swig’s director of leasing, said in a statement that the company was happy to welcome “two San Francisco-based enterprises advancing the application of artificial intelligence in business” and that it looked forward to “supporting their future growth.”
Distress at SF’s biggest apartment complex
But it wasn’t all good news for the city this week. San Francisco’s largest apartment complex, Parkmerced, went into receivership after owner Maximus Real Estate Partners defaulted on nearly $1.8 billion in loans.
A court appointed the San Diego-based Douglas Wilson Companies to serve as a receiver for the 152-acre, 3,221-unit complex at 3711 19th Avenue, south of San Francisco State University.
Douglas Wilson, founder of his eponymously named company, said its goal will be to safeguard Parkmerced and work toward its “repositioning.”
“It’s been lacking capital for some time,” Wilson told the Business Journal. The company is considering bringing in a new property management firm.
Maximus had proposed redeveloping the World War II-era garden apartments by adding 5,700 homes, 230,000 square feet of shops and restaurants, 80,000 square feet of offices and a 64,000-square-foot community center.
Although redevelopment plans were approved in 2011, and new renderings put out in 2022, the project never broke ground, with Maximus founder Rob Rosania citing “sky-high construction costs, inflation and supply chain issues.”
Major overhaul of Jay Paul’s CityView plans
In the South Bay, Jay Paul Company announced a new plan for its CityView development in downtown San Jose, swapping out some office buildings for an office-to-residential conversion, a brand new residential tower and retail.
Originally plans called for three 19-story, interconnected office towers containing 3.4 million square feet of offices, shops and restaurants. The company asked the city for a five-year pause on that plan last year, citing “current financial markets and a reduced demand for office leasing.”
Now downtown San Jose’s biggest office owner is moving forward, but with a new vision for a mixed-use community with a large residential component, plus office, retail and restaurants, according to a news release from the company.
“Demand for older Class B and C office space at this site has declined, while the need for housing in San Jose continues to grow,” company President Jay Paul told The Real Deal. “Right now, multifamily development is delivering stronger returns than aging office properties, making residential conversion an attractive proposition.”
In a statement, San Jose Mayor Matt Mahan called the project “groundbreaking” for its ability to help the city “reimagine what the capital of Silicon Valley looks and feels like in the age of AI.”
Read more
SF out of last place for first time in RTO race
Residential
San Francisco
SF’s largest apartment complex ordered into receivership
Development
San Francisco
Offices out, resi in for Jay Paul Company’s CityView
Two AI companies sign on at Swig’s 501 Second Street
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