O
penAI is expanding its presence in San Francisco's Mission Bay by subleasing a 315,000-square-foot building that previously served as Old Navy's headquarters. The six-story office space at 550 Terry Francois Boulevard will bring OpenAI's total office footprint to nearly 1 million square feet. Terms of the deal with owner DivcoWest were not disclosed.

    This move comes after OpenAI subleased 486,600 square feet from Uber in two buildings last year and marks the largest office lease of the year. The combined leases have widened OpenAI's office presence within its home base to nearly 1 million square feet, including several smaller offices in the Mission.

    The new deal may help alleviate San Francisco's record-high office vacancy rate, which stood at 37.3% this month. DivcoWest purchased the former Old Navy hub from Gap in 2022 for $356 million and had planned to revamp it for life science tenants.

    OpenAI's expansion raises its total AI footprint in San Francisco to 4.7 million square feet, accounting for 15% of all office deals this year. The city's office market has seen most leasing activity in the 3,000-20,000 square foot range over the past year, with a few notable exceptions.

    San Francisco Mayor London Breed has dubbed her city "the AI capital of the world," while San Jose Mayor Matt Mahan has challenged that claim, urging his city to welcome AI firms. Silicon Valley accounted for more than half of artificial intelligence tenant demand across the Bay Area last year, according to Cushman & Wakefield.