San Francisco Office Leasing Sees Strong Q4 Amid AI Boom

It’s been yet another successful quarter for office leasing in San Francisco, driven largely by a wave of artificial intelligence firms — and cryptocurrency ones — seeking new space.

Year-to-date, leasing activity stands at 8.4 million square feet in the City by the Bay — already larger than last year’s total of 8.3 million square feet — with final 2025 numbers expected to exceed more than 9 million square feet, according to a recent report from JLL.

Plus, of the total number of lease transactions accounting for more than 50,000 square feet, 33 percent were growth- or expansion-driven, the report found. The majority of those growth deals were from AI firms, but crypto firms were involved as well, JLL said.

“AI activity has re-anchored the city’s office fundamentals and created a new baseline for what healthy demand looks like,” Chris Roeder, JLL’s executive managing director, said in a statement to Commercial Observer.

“What we’re seeing now is a re-centering of the city around a new generation of growth companies that are taking real space, expanding headcount and making long-term commitments to the market,” Roeder added.

Recent AI leases signed in San Francisco include health care revenue management company R1’s 12,453-square-foot deal at 140 New Montgomery Street for its new AI lab’s headquarters, as CO previously reported. There were also some bigger deals earlier in the year, including workforce management company Rippling’s 123,000-square-foot lease at 430 California Street, and AI software company Databricks’ 150,000-square-foot deal at 1 Sansome Street.

As for crypto firms, Coinbase, the country’s leading cryptocurrency exchange, signed a lease in May for 150,000 square feet at 1090 Dr. Maya Angelou Lane in the city’s Mission Rock neighborhood.

“The momentum we’re seeing shouldn’t be viewed as a routine upswing,” Roeder said. “San Francisco is reorganizing around a new class of AI-driven growth companies, and it is a structural shift that’s helping reset the trajectory of the city’s office sector.”

San Francisco also saw its total vacancy fall to 34.4 percent quarter-over-quarter. The number is expected to decline further through the end of 2026, largely because an increase in leasing activity impacts vacancy numbers about two quarters later, according to JLL. 

San Francisco’s market is also seeing tightness for office space in the city’s residential neighborhoods such as Mission Bay, Showplace Square, North Waterfront and Jackson Square.

In addition, total availability in the city stands at just under 30 million square feet, a decrease of 3 million square feet since the first quarter of 2025, JLL said. And total sublease availability is at 5.3 million square feet, the lowest number since the second quarter of 2020.

It seems like all the momentum is set to continue throughout the next year, as San Francisco continues to see stabilizing demand, declining vacancy rates and a focus on AI firms, according to JLL.

Isabelle Durso can be reached at idurso@commercialobserver.com.