SF Tech Real Estate in Flux as Dropbox Exits, Databricks Expands
The Bay Area's tech real estate landscape continues to shift, with Dropbox planning to vacate its Mission Bay headquarters, a space OpenAI is reportedly considering for a sublease. In contrast, AI firm Databricks signed a 180,000-square-foot office lease in Sunnyvale. The moves reflect a broader trend of consolidation and strategic expansion as companies adapt to remote work and the growth of AI-focused teams.
- Dropbox's Mission Bay headquarters, known as The Exchange, is a four-building complex totaling approximately 750,000 square feet. The company signed the lease in 2017, and the property was sold to private equity firm KKR for $1.08 billion in 2021, marking one of the highest prices in San Francisco's history. - The move to vacate is part of Dropbox's shift to a "Virtual First" work model, a strategy the company has been implementing since the pandemic, which involves significantly reducing its physical office footprint. Even before this final exit, Dropbox had been subleasing large portions of the space to other companies, including a 133,896-square-foot lease to Vir Biotechnology. - OpenAI, the firm reportedly considering the space, has been in a phase of rapid expansion and already occupies nearly 1 million square feet in the Mission Bay neighborhood. This potential sublease would further cement the area as a central hub for leading AI research and development. - In contrast to Dropbox's consolidation, Databricks' expansion reflects its significant growth, having increased its global headcount by 6 times in about five years to over 8,000 employees. This hiring surge has continued even as other tech firms have implemented layoffs, driven by high demand in the data and AI sector. - Engineering is the largest department at Databricks, comprising nearly half of the company's workforce, indicating a focus on product development and innovation as it scales. The company is actively hiring for roles such as lakehouse data engineers and ML/LLM engineers to support its growth. - These real estate moves highlight a "flight to quality" trend in the Bay Area, where companies are prioritizing modern, highly-amenitized office spaces in prime locations to attract and retain talent, particularly for in-person collaboration. - While San Francisco's overall office vacancy rate was approximately 24.7% in January 2026, the market is experiencing a significant uptick in leasing activity driven by the AI industry. In 2025, AI-related leasing was largely responsible for the city's fifth consecutive quarter of positive net absorption.
