OpenAI has signed San Francisco’s biggest office lease of the year, according to a source with direct knowledge of the deal. This comes on top of last year’s record lease by the fast-growing company.
A year after subleasing nearly half a million square feet from Uber’s Mission Bay headquarters, OpenAI just finalized a lease for 350,000 square feet at 550 Terry A. Francois Blvd., the former headquarters of Old Navy.
Gap Inc., the parent company of Old Navy, sold the property to investor DivcoWest in 2022 for $356 million, or $1,130 per square foot.
The deal brings OpenAI’s total square footage to just under 1 million square feet; this includes several smaller offices in the Mission. The San Francisco Business Times was the first to report the deal.
Preliminary data released Wednesday by real estate services firm CBRE show that San Francisco office vacancies rose 0.3% in the third quarter to 37.3% — the highest ever in the city.
But availability, or office space ready to lease, remained stable at 39.1% between the second and third quarters, the firm said — signaling that the city’s office market may be at or near peak vacancy.
Outside of a handful of large deals, the majority of office leasing activity in San Francisco over the last year has been spaces between 3,000 and 20,000 square feet, according to data from real estate firm Avison Young.
After OpenAI’s deal Friday, the total AI footprint in San Francisco jumped from 4.3 million to 4.7 million square feet, according to real estate firm JLL, which calculated that roughly 15% of all office deals this year have been signed by companies in that industry.
Neither DivcoWest nor OpenAI could immediately be reached for comment Friday.