Artificial Intelligence flock to SF, “the AI capital”

Mayor London Breed has declared San Francisco “the AI capital of the world” – and the robots are beginning to fill its empty offices.

From “Cerebral Valley” to Showplace Square, AI firms now seek office space in the city, where rents are easing within a troubled office market, the San Francisco Business Times reported.

For five years, San Francisco and Silicon Valley have led the world in venture capital funding for AI companies. Now one firm has cut a deal to expand into an office tower owned by Kilroy Realty, based in Los Angeles.

Last month, Hive subleased 60,000 square feet at 100 First Street, in the Financial District, for undisclosed terms. The cloud-based AI firm now occupies 20,000 square feet at 575 Market Street.

Its new headquarters will be based on three floors in the 27-story tower once occupied by Okta, a cybersecurity firm that leases 14 floors through 2028. Okta listed the floors for sublease in 2021.

The Hive sublease marks the largest AI deal since OpenAI leased nearly 100,000 square feet in the Mission District in late 2020, according to the Business Journal.

Last month, Tome leased 17,000 square feet at 600 Townsend Street and Chef Robotics in April leased 11,000 square feet at 976 Mission Street.

Artificial intelligence firms now lease offices in 80 buildings in San Francisco, according to a report from JLL last month. They include OpenAI; Github; Cruise, a self-driving car company; and Niantic Labs, creator of the augmented reality mobile game Pokemon Go.

While most are in the Financial District, South Beach and SoMa, a cluster has grown on the edge of the Mission District.

OpenAI is looking to expand in either Downtown, South San Francisco or the Peninsula, Supervisor Ahsha Safai and unidentified sources told the Business Times. Potential sites include Showplace Square, where tech firms such as Airbnb shed offices during the pandemic.

Venture capital funding in San Francisco rose 49 percent in the first half of the year to $82 billion, of which 30 percent went to AI firms based in the city, according to Raise Commercial Real Estate.

“Of the most-funded AI companies that have an office in San Francisco, I would say that 99 percent are actively in the market ‘trading paper,’ or working to sign a lease,” a local broker who is involved in several pending deals and asked to remain anonymous told the Business Times.