T
ech leasing is driving growth in San Francisco's office market, with AI firms leading the charge. According to preliminary figures from CBRE, tech tenants accounted for nearly half of all leasing activity this year, representing 21% of the city's total office space leased. This marks a significant increase from pre-pandemic levels, when tech companies represented around 50-60% of leasing activity.

    The latest data shows that tech office leasing reached 3.6 million square feet in San Francisco, accounting for 47% of the city's total office space leased this year. AI tenants were particularly active, with close to half of all tech leasing attributed to these firms. The average lease size for an AI company was around 15,000 square feet, although larger deals like OpenAI and ScaleAI's leases of 315,000 square feet and 180,000 square feet respectively skewed the average.

    The growth in tech leasing is a welcome sign for San Francisco's office market, which has struggled since the pandemic. Office vacancy rates have been declining, with the fourth quarter seeing a drop to 36.7% from 36.9% in the third quarter. CBRE executive director Colin Yasukochi notes that this recovery is likely to be "uneven and segmented," with high-quality buildings performing best.

    The cyclical nature of tech sector leasing suggests that this growth may continue, driven by emerging technologies like AI. As Yasukochi points out, each tech boom has been characterized by a new technology driving growth, followed by an increase in leasing activity. With the current rise of the AI sector, it's possible that we'll see continued growth in tech office leasing in San Francisco.