San Francisco’s office market is showing clear signs of recovery, and the implications extend well beyond the city itself.
According to reporting based on data from commercial real estate firm JLL, office leasing activity in San Francisco is on pace to exceed 9 million square feet in 2025, reaching levels last seen before the pandemic. That figure is closely in line with the city’s long-term average prior to 2020, suggesting that employers are once again making longer-term commitments to maintaining a physical presence in the city.
A significant portion of this recovery is being driven by artificial intelligence companies, which have already leased approximately 1.8 million square feet of office space this year. That accounts for more than 20 percent of total leasing activity and reflects the growing role AI firms are playing in reshaping San Francisco’s economic landscape. Their expansion has also helped attract other businesses in adjacent industries, contributing to broader market momentum.
As leasing activity has increased, overall office availability and vacancy rates have begun to decline. Several large tenants have recently moved into newly leased spaces, and certain neighborhoods, including Mission Bay and areas along the waterfront, are now among the tightest office submarkets in the city. This concentration of demand has started to push interest into nearby districts, creating a ripple effect across San Francisco’s office market.
Oakland/Piedmont/Berkeley benefits from San Francisco’s Turnaround:
This renewed confidence in San Francisco’s employment base is meaningful for the East Bay as well. Historically, periods of increased business activity and job stability in the city have supported stronger housing demand across the bay, particularly in established neighborhoods known for their quality of life and accessibility. Communities such as Crocker Highlands often benefit as professionals look for residential options that balance proximity to major employment centers with neighborhood character.
Looking ahead, JLL expects office leasing activity to remain at similar levels into 2026, with artificial intelligence companies continuing to expand at a steady pace. By the end of the decade, AI firms alone are projected to occupy between 12 and 13 million square feet of office space in San Francisco, further reinforcing the city’s role as a global innovation hub.
Overall, the rebound in San Francisco’s office market points to a broader stabilization of the regional economy, a trend that can support both commercial and residential real estate across the Bay Area.
Source: Sarah Klearman, Staff Reporter, San Francisco Business Times
