Finance & Economics

AI Companies Hunt for San Francisco Offices

The company Hive, which operates in the field of artificial intelligence, announced the subletting of three floors of an office located in the center of San Francisco.

AI Companies Hunt for San Francisco Offices

Experts assessed this intention of the firm as a clear sign of a high level of activity in the market, where the need for specialists is growing after the completion of the activities of some large technology companies.

Alexander Quinn, a leading Northern California researcher at Jones Lang LaSalle Inc, said Hive plans to occupy about 57,000 square feet at 100 First St., taking up space in a 27-story tower that software firm Okta leased in 2017.

Okta has already announced plans to expand the scope of its activities. The relevant intentions of the company also provide for the return of the firm’s presence in the real estate market.

Quinn says that currently in San Francisco, more than 10 companies engaged in artificial intelligence, including Hive, are located in offices with a total area of 800 thousand square feet. He also stated that artificial intelligence aspires to space. Such a formulation can have many interpretation options, among which, for example, the statement of the significant technological potential of AI and the designation of the industry as actively scalable and occupying an increasing part of the business activity space.

Quinn says that companies specializing in artificial intelligence development prefer to work in an office. According to him, this format of workflow organization is considered the most relevant and appropriate for firms whose existence is at the startup stage. Quinn did not name the companies that are currently looking for office space.

San Francisco is home to some of the most successful firms in the field of artificial intelligence, among them OpenAI, which created the popular chatbot ChatGPT, raised investment funds for more than $10 billion, and is mass recruiting staff.

Preliminary data from CBRE Group says that in the second quarter of this year, the vacancy rate of offices in San Francisco increased to 32%. During this period, about 1.9 million square feet of additional space became available. In 2019, before the coronavirus pandemic, the vacancy rate in San Francisco did not exceed 4%.

Technology companies based in this city, including Dropbox, Salesforce, Twitter, and Uber Technologies, are among the industry giants that have put premises all over the US on the sublease market.

Kastle Systems reports that currently, the workload of offices in San Francisco on a weekday is less than half of the level that was recorded before the coronavirus pandemic. In a high-tech city, a significant part of employees continue to work remotely.

The lack of day workers and concerns about safety and risks of homelessness have gone beyond the office sector, and have become a factor of negative impact on the San Francisco tax base. Currently, the city is recording a decrease in the value of real estate.

The owner of two hotels located in San Francisco has stopped payments on loans for real estate and announced his intention to exclude these assets from his portfolio. Also in June, investors who were part of the owners of a local large shopping center abandoned this facility.

As we have reported earlier, AWS Launches AI Startup Accelerator in China.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.