SF's AI Boom Drives Downtown Real Estate Deals
San Francisco's downtown real estate, once feared to be in a "doom loop," is seeing a major rebound driven by AI. Blackstone is making massive investments in new skyscrapers, while AI firm Anthropic just leased premium office space at a stunning $300 per square foot, signaling a new era of demand.
Anthropic's massive lease is a consolidation of its presence in what is now being called "AI Alley." The company, founded by San Francisco natives and siblings Dario and Daniela Amodei, already had headquarters at 500 Howard St. and will now occupy the entirety of the nearby 300 Howard St. tower. The 13-year deal for the 25-story, 466,000-square-foot tower is one of the largest office leases in the city since 2019. The building, formerly home to Fitbit and StubHub, was purchased by a Blackstone and DivcoWest joint venture for a reported $111.34 million and is being specifically repositioned for top-tier tech tenants. This AI-fueled demand is a sharp reversal of fortune for a city plagued by "doom loop" fears, which saw office vacancy rates soar from 4% in early 2020 to over 35% by 2025. As of late 2025, however, the market posted positive net absorption for the first time since 2019, signaling a potential bottoming out. The turnaround isn't isolated to a few big deals. Commercial real estate brokers are currently tracking 1.4 million square feet in active space requirements from 39 different AI firms, suggesting a broad and sustained wave of demand. The economic impact is spilling into the housing market. San Francisco's median house price appreciated over 5% year-over-year, making it the strongest market in the Bay Area. Apartment vacancy has also plummeted to its lowest level in over a decade as AI talent flocks to the city.
