Artificial intelligence giant Anthropic has leased an entire 25-story office tower in downtown San Francisco in the latest sign of how the industry is helping resurrect the city’s pandemic-battered office market.
The language model maker has inked a deal to occupy 300 Howard St. in the city’s newly reinvigorated SoMa district, putting an end to several months of rumors about Anthropic being in talks to occupy the more than 400,000-square-foot building as a long-term headquarters. The lease is a signal of the ambitions of the fast-growing AI company, which was started five years ago by a group of former OpenAI researchers headed by siblings Dario and Daniela Amodei.
“With over 1,300 employees in the Bay Area and counting, I'm especially excited about what this growth means for the local community as we look to deepen our partnerships with the incredible businesses and organizations doing meaningful work in the city that we love and call home,” said President and co-founder Daniela Amodei in an emailed statement to CoStar News.
She added that the pair of Anthropic founders grew up in San Francisco. “It’s where Anthropic was founded, and where so much of our story has unfolded,” she said.
The lease, one of the largest signed in San Francisco in several years, is also a major win for owners San Francisco-based investor DivcoWest and Blackstone, which teamed up to purchase the totally vacant early-2000s office building last spring for around $111 million, then the biggest office deal San Francisco had seen since the COVID-19 pandemic upended the city’s office market. The buyers hoped the building would morph into a “high-performance hub built for today’s most ambitious teams.”
The deal for the building located within the city’s so-called AI Alley is the latest sign that the industry is bringing downtown San Francisco back to pre-pandemic levels of activity.
Downtown comeback
San Francisco saw its office vacancy rate rise from the lowest in the nation to the highest after 2020, as a perfect storm of pandemic lockdowns, remote work and layoffs by technology companies caused tenants to downsize at record levels.
A string of AI leases in the tech-centric South of Market Street neighborhood has brought life back to the neighborhood, which during the pandemic years became known for its empty sidewalks and half-finished projects dating from the city’s last tech boom.
In recent months, explosive growth across the AI sector, coupled with many companies’ emphasis on in-person work, has translated into a procession of office deals that has helped reshape demand dynamics in many pandemic-battered cities.
In San Francisco alone, AI tenants are on the hunt for about 9 million square feet of office space, up from 6.5 million earlier this year, according to JLL. And AI companies have signed upward of 85 leases in San Francisco so far this year, according to data from Cushman & Wakefield. San Francisco is home to the bulk of leasing activity among AI firms.
Anthropic has become known as a growing powerhouse in the artificial intelligence revolution, with its Claude large language models that aim to be safer and more ethical than some of its competitors. In response to investor interest, the company reportedly recently doubled its funding target to $20 billion for a valuation of $350 billion, with big backers such as Amazon and Google. The company currently has around 2,500 employees.
The firm is currently headquartered two blocks away from its new home. At 500 Howard St. it has some 233,000 square feet of space it subleased from Slack, another San Francisco tech outfit. It added another 104,000 square feet late last year at 505 Howard St.
AI investment stronghold
DivcoWest had previously acquired a 49% stake in 300 Howard St., then known as 199 Fremont St., in late 2019, at the height of San Francisco’s tech-driven real estate boom, for $186.2 million. Then it joined with Blackstone to buy the whole building.
The landlords said they planned to outfit the building, which was completed in 2000, with the sort “hospitality-style” upgrades that have become fashionable in post-pandemic office buildings, such as lounges and fitness centers. Over the years, it has been home to tech startups such as StubHub, Fitbit and eBay, among others. DivcoWest owns 301 Howard St. across the street.
Since 2022, it has also owned 550 Terry A. Francois Blvd. in Mission Bay, another AI stronghold that since 2024 has housed ChatGPT maker OpenAI, which leases the entire 315,000 building. OpenAI, Nvidia, Anthropic, Harvey AI and other artificial intelligence startups have signed some of the city’s largest office lease deals and helped drive leasing activity back toward positive territory.
