The maker of ChatGPT is among firms contributing to more office demand as the artificial intelligence company prepares to once again expand in San Francisco.
OpenAI has put out spatial requirements for up to 300,000 square feet of office space, according to several people with knowledge of the plans, a search that could provide another hefty boost to a city that has gradually been rebuilding some of its pre-pandemic momentum. While details of the hunt for additional space are still tentative, it has the potential to result in one of San Francisco's largest new office deals in half a decade.
The San Francisco-based tech company has already finalized two major deals within a span of less than two years, stretching its regional footprint by nearly 800,000 square feet.
OpenAI, which did not respond to CoStar News' requests to comment, has been on an aggressive growth spurt in recent years that executives have said will ultimately double its current 2,000-person workforce. OpenAI and other artificial intelligence companies have played a leading role in the sector's prominence as one of the biggest demand generators for space across the city's recovering market.
AI companies have expanded their collective footprint in the city to more than 5 million square feet over the past couple of years, according to data from CBRE, and the sector has the potential to stretch beyond 21 million square feet over the next half decade. If that demand materializes, it has the potential to cut down San Francisco's record-high vacancy rate by about half and catapult the city back to its pre-pandemic standing as one of the strongest office markets in the world.
The city's current vacancy rate is about 23%, according to CoStar data, a significant multiple compared to the less than 6% rate reported in 2019.
AI growth
OpenAI in September finalized an agreement to lease the entire 315,000-square-foot building at 550 Terry A. Francois Blvd., closing the largest office lease to be signed in San Francisco last year.
That expansion came within a year of OpenAI's agreement to take over two buildings it subleased from Uber in late 2023. That sublease agreement, which included about half a million square feet across the buildings at 1455 and 1515 Third St., combined with its other outposts in the city means the ChatGPT maker now occupies about 1 million square feet in the city.
And that's before it fulfills its latest expansion efforts.
Artificial intelligence company OpenAI finalized a lease to fill the San Francisco building at 550 Terry A. Francois Blvd. (CoStar)
OpenAI ramps up San Francisco expansion with latest full-building lease.
The accelerating AI property demand is a welcome source of activity for San Francisco. In recent months, more than half a dozen companies and fast-growing start-ups have signed leases to accommodate expansions in the city.
At the Jamestown-owned Waterfront Plaza office complex, a potpourri of AI start-ups collectively signed nearly 24,000 square feet of deals over the past several months. One company, Goodfire AI, recently expanded its space at the complex from 4,100 to 19,200 square feet, the Atlanta-based landlord confirmed.
The moves not only signal that the city's economic rebound is gaining steam, they also underscore the firms' commitment to in-person work. OpenAI, for example, requires in-person work at least three days a week.
The AI growth is also spilling over into other tech-concentrated markets such as Silicon Valley, Seattle and New York.
Within a few months of signing a 90,000-square-foot lease for its first Manhattan office, OpenAI last month signed a deal to take over two floors totaling just shy of 70,000 square feet in a former Microsoft-occupied tower in Bellevue, Washington, an affluent suburb across Lake Washington from Seattle. In addition to its headquarters and ancillary locations in San Francisco, New York and the Seattle area, the company has hubs in Tokyo, London and Dublin
By Katie Burke
CoStar
June 20, 2025
