AI Startup Sierra Doubles Space In SoMa, Fueling Recovery Optimism
Artificial intelligence startup Sierra doubled its footprint at 235 Second St. in San Francisco’s South of Market neighborhood to approximately 82K SF, the San Francisco Business Times reported.
Last July, the company inked a deal to expand and relocate to a 41K SF space in a 267K SF building owned by Birmingham Development. Sierra was founded by former Salesforce co-CEO Bret Taylor and 18-year Google executive Clay Bavor.
Now, the company has plans to grow further.
AI companies are one of the subsets of the tech industry still taking space in San Francisco, raising hopes among CRE pros in the city. The AI sector was responsible for 21% of total office leasing activity, or nearly half of the tech industry’s 47% leasing total in 2024, according to CBRE.
Last fall, OpenAI, which requires at least three in-person work days per week, leased the entirety of a 315K SF building at 550 Terry A. Francois Blvd. in the Mission Bay neighborhood, just a block from where it is already subleasing 485K SF from Uber. Both deals were blockbusters in a market that has seen few major office leases since 2020.
And in May 2024, ScaleAI subleased nearly 180K SF at 650 Townsend St.
A CBRE analysis of Pitchbook data found that in 2024, companies in the Bay Area received $88B in venture capital funding, making up half of all VC investment for the year.
As of mid-February, nearly 200 AI companies occupy 5M SF in San Francisco, accounting for 8.8% of total occupied office space in the city, according to CBRE. That number is expected to increase throughout 2025 as other AI companies grow and gain momentum and additional office space is needed.
“With many AI companies focused on growth and collaboration, we typically see these companies in the office more often which in turn increases vibrancy in the downtown area and may also create additional office space demand,” Colin Yasukochi, executive director of CBRE’s Tech Insights Center, told Bisnow in an email. This pent-up demand combined with new hiring should make 2025 a much better year for office leasing.”
The sentiment is shared by JLL, which said in its latest Global Future of Work survey that AI and generative AI sit among the top three technology sectors expected to have the biggest impact on commercial real estate. JLL forecasts that AI companies will lease around 12.7M SF of office space in San Francisco by 2030.
As of early 2025, 42% of AI companies are concentrated in the San Francisco Bay Area, followed by Boston, Seattle and New York, according to JLL. Approximately 20% of workers in the U.S. who have AI-related skills are located in the Bay Area, with more coming due to training at the University of California, Berkeley, and Stanford University.
