Artificial intelligence (AI) is rapidly getting smarter and steadily finding its way into mainstream businesses. According to the Stanford Institute for Human-Centered Artificial Intelligence, which tracks public data related to AI, global AI investments, including related to real estate, natural resources, and infrastructure, reached $91.9 billion in 2022, 18 times more than it was a decade ago.
Demand for AI professionals is similarly growing as employers seek specialized skills in computer science, data analysis and programming languages such as Python and SQL. Mined from millions of job postings collected from more than 51,000 websites, the number of AI-related job listings nationwide increased by almost two percent annually over the past two years. Newer forms of AI, such as generative AI, which can produce text, video, images and other content in a matter of seconds, are key contributors to this boom.
A leading player in generative AI is Mishpot-based OpenAI, founded in 2015, which introduced its marquee generative AI product, ChatGPT chatbot, three years later. Originally headquartered between the Mission and Potrero Hill in the 40,000-square-foot Pioneer Building at 3180 18th Street, OpenAI expanded two blocks east in 2020, leasing an 100,000-square-foot office building located at 575 Florida Street. According to District 9 San Francisco Supervisor and mayoral candidate, Ahsha Safai, OpenAI has roughly 500 employees working from these offices.
“OpenAI wants to expand to 1,500 to 2,000 employees. They are one of the prime groups that is looking to come in and rent some of this sublease space, and they’re making a decision whether to stay in San Francisco or go to South City or the Peninsula,” said Safai during a recent hearing. “That is an actual trend that’s happening in our City right now.”
According to The San Francisco Business Times, OpenAI is involved in “serious” discussions for a significant amount of space at Uber’s corporate headquarters in Mission Bay and is evaluating other San Francisco locations. Property owners are reporting a surge of tenant interest in industrial spaces in Mission and Potrero Hill. Once generative AI reaches commercialization in film production studios, auto repair shops, and distribution and repair facilities more generative AI startups could be attracted to Southside neighborhoods.
Jordan Loesch, leasing manager at Mason on Mariposa, located at 1601 Mariposa Street, said the AI boom has attracted an influx of residents.
“We definitely started to get more inquiry-based applications from people working at AI companies starting in June. It seems like AI is bringing them here and is what they do for work,” according to Loesch. “In June, these applications didn’t equate to that many deals, but as we rolled into September, that’s when we really started to see deals signed stemming from tenants working on site at these AI companies, or completely remote. However, most of them sounded like they needed to be in the office.”
Commercial real estate company JLL has mapped more than 80 AI companies in San Francisco, with about two dozen businesses located near Mission, Potrero Hill, Showplace Square and West SoMa, which is becoming known as “Area AI.” In recent months, dozens of AI-related startups, social clubs and meetups have proliferated in the vicinity.
Alexander Quinn, senior director of research at JLL, said the firm is optimistic about San Francisco’s economic recovery as AI companies enter the commercial real estate market.
“It’s driving demand specifically here. San Francisco has just been a series of gold rushes. We’ve known ourselves to be an up and down type of economy historically, and that really manifested over the pandemic, and now we’re just starting to see that recovery,” said Quinn.
Following a succession of tenant departures over the summer, Loesch believes the AI boom will enable Mason on Mariposa to fill its tenant pipeline as the City continues its revival.
“It’s definitely helping amid everything that happened recently with layoffs and people worrying about their leases. This is a new source from getting new leads and filling the gap from the economic fallout,” said Loesch. “I think the Potrero Hill area will see more workers coming in for AI jobs, and those people will refer other people to come. We’re doing great with resident referrals thanks to demand from AI companies. One of the last residents we signed referred other coworkers, which materialized into four to five new tenant sign-ons, and we see this trend continue rising.”
Jessica Zimmer 
Chaitanya Tondepu