Driving the news: San Francisco’s office space crisis may have found its rebound engine: artificial intelligence. While tech exits and retail closures have haunted downtown, a surge in AI leases is reversing the city’s office vacancy trend for the first time since the pandemic.
Details: San Francisco’s office vacancy rate fell to 35.4% in Q1 (still staggeringly high, but down from last year’s peak) and is projected to dip 1–3 points by Q3, says real estate firm JLL. AI companies signed 167 leases in Q1 2025 alone, up from just 2 in 2020.
AI firms now occupy 4.8M square feet in the city, nearly double from 2022. For example, OpenAI operates from five SF locations, employing about 2,000 people, and Databricks is more than doubling its office size and workforce in SF.
Why it matters: This growth is reshaping San Francisco’s economic outlook and proving the city can still attract cutting-edge industries. The influx of AI talent, investment, and new office commitments is driving job creation and signaling a positive turn for downtown businesses.
The big picture: While some tech giants have pulled out, many have doubled down, and AI companies are investing heavily. They’re drawn by SF’s unmatched ecosystem of research institutions, venture capital, and specialized talent. This has created a magnet effect that keeps AI growth anchored locally.
Between the lines: Much of this revival stems from a renewed public-private focus. City officials have courted tech firms with policy shifts and tax credits, up to $1M for new or relocating companies. That mix of support and optimism is helping rebuild business confidence.
What’s next: Nvidia and Coinbase are among the latest to express commitment San Francisco, hinting at even more momentum. But sustaining this growth will depend on how the city manages safety, cleanliness, and budget hurdles.
The bottom line: San Francisco isn’t done yet. Thanks to AI, the city’s office market is showing real signs of life, and it’s bringing back jobs, energy, and opportunity with it.
