San Francisco’s office market has been on a wild ride since the pandemic hit, but it looks like the tide is finally turning. A new wave of tenants—many tied to the booming artificial intelligence (AI) and cryptocurrency sectors—are stepping in to fill the massive gaps left by tech giants who downsized or ditched their leases over the past few years. One standout example? Tools for Humanity, a cryptocurrency startup co-founded by OpenAI’s Sam Altman, just snagged a huge new space in the city’s Showplace Square neighborhood. Let’s dive into what this means for San Francisco’s recovery—and why office space demand is heating up again.
Tools for Humanity’s Big Move
Tools for Humanity recently inked a deal to lease the 600 Townsend East building, growing its footprint from a modest 10,000 square feet to a whopping 87,400 square feet. If the name sounds familiar, it’s because this startup—founded in 2019—has made waves by scanning people’s eyes in exchange for crypto tokens (yep, you read that right). Previously cramped in a tower at 650 California St., the company clearly needed room to stretch its legs.
Interestingly, they’d been eyeing a 60,000-square-foot spot at the shiny new Mission Rock development, a $2.5 billion project led by Tishman Speyer and the San Francisco Giants. But those talks fell apart earlier this month, paving the way for their pivot to Showplace Square. Neither Tools for Humanity nor their new landlord, LBA Realty, spilled the tea to CoStar News, but the buzz is real—this move is a big win for the area.
From Airbnb’s Loss to a Market Gain
The 600 Townsend East building has its own story. It used to be an extension of Airbnb’s headquarters just a few blocks away at 888 Brannan St. But when Airbnb downsized hard during the pandemic, this space hit the sublease market in 2021. No takers stepped up, and it eventually became a direct listing. LBA Realty swooped in last year, buying the property for $23.35 million—a steal compared to the $50.5 million Blackstone shelled out in 2016. That’s a textbook example of how San Francisco office valuations have tanked since the pre-pandemic glory days.
But here’s the kicker: buyers like LBA are betting big on a rebound. With office vacancy rates still sky-high and property values down 50% or more in some cases, the city’s reputation as a top-tier (and pricey) office market took a hit. Yet, deals like this one signal that commercial real estate in San Francisco might just be clawing its way back.
AI and Tech: The New Heroes of Leasing
So, what’s driving this momentum? Two words: artificial intelligence. While legacy tech players like Meta, Salesforce, Dropbox, and Pinterest dumped millions of square feet over the past five years—pushing the city’s availability rate past 26%, per CoStar data—AI companies are picking up the slack. Last year alone, AI office leasing in the Bay Area hit 2.4 million square feet, more than doubling these firms’ previous footprints.
And it’s not just AI. Big names like Gap, JPMorgan Chase, and even Salesforce are nudging employees back to the office more often, boosting foot traffic and sparking hope that San Francisco’s office market recovery is for real. Leasing activity has been creeping up over the past six months, hitting its highest volume since 2022, according to CoStar. That’s a stat worth watching if you’re into commercial real estate trends.
Why This Matters for San Francisco
Let’s zoom out. San Francisco has been hammered harder by remote work than any other U.S. market, leaving landlords and investors scrambling. But the rise of AI and innovative startups like Tools for Humanity is flipping the script. As Colin Yasukochi from CBRE’s Tech Insights Center put it, “AI companies are really leading the growth charge and having a substantial impact in terms of rising demand.” Translation? The city’s not back to its pre-pandemic peak yet, but the vibes are shifting.
For anyone tracking San Francisco real estate or the tech industry’s impact on office space, this is a storyline to follow. The city’s still got a long road ahead—vacancy rates aren’t budging overnight—but with AI and crypto tenants stepping up, the foundation for a comeback is taking shape.
What do you think—could this be the start of a full-on San Francisco office market rebound?
