Before it emerged as San Francisco’s hottest neighborhood, the only things going for San Francisco’s Mission Bay neighborhood were a driving range and warehouses that hosted underground raves.
Gradually, then all at once, came UCSF’s new hospital and campus, the erection of Chase Center and new offices, and thousands of apartments and condos built to support a new city emerging on the eastern waterfront.
The neighborhood was on the rise before the pandemic but went into a deep freeze as major office tenants vacated glass-lined offices filled with furniture but no workers. As a result, Thrive City — the plaza surrounding the Warriors’ arena — sat mostly empty, meaning residents generally had to leave the neighborhood to eat or experience the charms of the city.
Cut to 2025, and Mission Bay is a rare bright spot among San Francisco’s commercial real estate woes. The neighborhood has been recovering faster than any other part of the city, aided by a potent mix of artificial intelligence companies, new parks, and a rash of retail leasing.
According to real estate firm Cushman & Wakefield, the neighborhood’s office vacancy rate is 12.2%, a third of the citywide 34.2%. Mission Bay also has the highest average asking rent, closing last year at $129.50 per square foot, more than twice as much as office leases in the Financial District and SoMa.
The charge was led by OpenAI, which, since launching ChatGPT in 2022, has leased nearly 800,000 square feet of office space in the area, including half of Uber’s headquarters. Meanwhile, up the street at the Giants’ and Tishman Speyer’s new Mission Rock development, Visa moved into its new 300,000 square feet headquarters in June.
The positive momentum has had a knock-on effect on the previously sluggish retail leasing market, broker Alex Sagues of CBRE said. Since taking over Mission Bay’s listings during the pandemic, his team has brought in a bevy of well-known San Francisco brands, including Che Fico, Burma Love, and Harmonic Brewing.
Señor Sisig, Fikscue Craft BBQ, Splash Sports Bar, and Taco Primo (a new concept from the owners of The Snug) will join them, rounding out the offerings at Thrive City ahead of next month’s NBA All-Star weekend.
“There’s just not any other neighborhood in the city with this kind of mix of live, work, play,” Sagues said, adding that two national restaurant brands just signed leases at Mission Rock, which already has Flour + Water Pizzeria and Arsicault Bakery.
Part of what has turned Mission Bay into a destination has been the construction of two of San Francisco’s newest public parks. The five-acre China Basin Park that’s part of Mission Rock and the 5.5-acre Bayfront Park opened last year, financed by a mix of public dollars and philanthropy.
Sagues said his team’s leasing strategy was to pursue as many of the city’s successful homegrown brands as it could rather than wait for potentially interested parties to call on each available space.
“One thing this area was missing was the historic charm of San Francisco,” Sagues said.
“So we had to counter that by pitching [business owners] on a vision that the whole would be bigger than the sum of its parts. Otherwise, it’s scary to go into a new area alone.”
Desmond Tan, owner of Burma Superstar, agrees. Before Sagues got involved in the leasing, Tan turned down offers to open in Thrive City because the area lacked a sense of community and sufficient foot traffic outside of Warriors games, he said.
But last month, convinced that a critical mass was forming, he opened his Kayah restaurant and bar just outside the Chase Center. The new concept features a blend of his greatest hits, such as tea-leaf salad and Burmese beef curry, with Southeast Asian street-food classics like stir-fried noodles, samusas and flat breads.
“It’s day and night from before,” Tan said of Mission Bay’s renaissance. “It feels like a completely different city when you’re here now. People seem to be enjoying it.”
The neighborhood looks poised to continue growing. After shrinking its office presence elsewhere, Lyft renewed its lease at the China Basin for another decade, and the Giants and their development partners are only halfway through their four-phase redevelopment of Mission Rock.
But is the new waterfront thriving at the expense of the city’s urban core? Robert Sammons, senior director of research at Cushman & Wakefield, doesn’t think so.
Of San Francisco’s 86.3 million square feet of office space, only around 2 million is located in Mission Bay — most of which is already occupied.
“If a major office tenant needs something new in the next two years, they don’t have a lot of choices left there,” Sammons said.