AI Firm Replit Leaves San Francisco for Foster City

The reasons AI startup Replit is leaving San Francisco behind are “boring, sad and predictable,” according to a post on X from CEO Amjad Masad. He lists crime and dysfunction as motives for the company’s decision to move to Foster City to expand to nearly 10 times its previous office space.

In a post that has already been viewed about 300,000 times between Monday evening and Tuesday afternoon, Masad also said he was drawn to the Peninsula city’s “long-lost California pro-growth mentality,” “‘Venice-like’ lagoon system” and relative affordability.

Replit was represented by Cody Kollmann at Lee & Associates, who wrote on LinkedIn that the company was taking 48,000 square feet at 1001 East Hillsdale Boulevard, in the eight-story Parkside Towers office complex. According to his post, just 16 months ago, the AI developer tool company valued at $1.2 billion was in a SoMa live/work loft with a mostly remote workforce. A previous post from Masad on X from March 2023 said the company’s office was at 677 Harrison Street in South of Market, a brick and timber two-story building with 5,700 square feet.

“This significant growth is a testament to the invariant need of in-person connectivity to build an iconic company and the cultural antibodies that a great workplace can yield to attract & retain top talent,” Kollman wrote in the post.

He declined to comment further on the deal, citing an NDA.

Newmark represented Heitman, the Chicago-based owners of Parkside Towers, which was pursuing a life-science conversion of the space last year. Newmark did not reply to requests for comment.

At the time the conversion was approved, Heitman Vice President Matt White said the two-building office complex had nearly 400,000 square feet and was 80 percent leased, but that would drop to 72 percent this year as leases expired.

Derek Daniels, regional research director at Colliers, said via email that he had not heard of any AI groups leaving San Francisco due to crime and safety concerns prior to this announcement and that “San Francisco undoubtedly remains the global center of AI by funding and occupier footprint.”

That said, the AI boom that started in the Inner Mission/Potrero Hill submarkets has now blossomed throughout the city and AI is “certainly expanding south into the Peninsula and Silicon Valley as well,” he added. “As tenants incubate or expand to those markets, expect more AI users to cluster there.”

William O’Daly, senior associate at Avison Young, said via email that he did not think the city would lose more AI companies over safety and cleanliness concerns, given that crime is at its lowest point in 10 years, street conditions are improving and the world’s “most exciting” AI companies and largest AI venture firms and incubators “call San Francisco their HQ.”

He said he’s happy that Foster City won a “great AI company” and that he hopes Replit can grow and add jobs to the area, but that San Francisco still tops the Peninsula in its ability to attract talented young professionals.

“The upcoming generations want to live in activated cities,” he said, citing New York City’s continued rise in popularity since the pandemic. “Not post-World War 2, family-oriented suburbs.”

In the post on X, Masad said Foster City was his first home when he moved to California with his wife and when another poster replied that Foster City is “kinda quiet,” Mossad said that was also part of the appeal.

“Quiet is good. That’s why Silicon Valley worked — the most fun thing to do is build computers and software,” he posted, adding that it was also a place where Replit could make its mark.

“When you think of Mountain View, you think of Google; when you think of Cupertino, you think of Apple,” he said. “My hope is that in the future, when you think of Foster City, you’ll think of Replit.”