San Francisco’s Next Office Revival May Be Powered by AI

(TNS) — San Francisco's office recovery is increasingly being written by artificial intelligence, with two AI companies moving toward significant leases in Showplace Square — a neighborhood that previously symbolized the city's tech-era pullback.

Together AI is in talks to lease 150,000 square feet at 2 Henry Adams St., while Physical Intelligence is nearing a deal for a roughly 60,000-square-foot building being marketed as an office sublease by Airbnb at 808 Brannan St., according to sources familiar with the negotiations.

Neither company returned requests asking for confirmation of these leases.

Together AI, which has raised more than $500 million from investors pushing its valuation to over $3 billion, builds open-source generative AI models and cloud infrastructure for developers, while Physical Intelligence is a robotics AI startup valued at roughly $5.6 billion that is currently based in the Mission District.

The arrival of AI companies, along with the planned satellite campus by Vanderbilt University, signals the revival of Showplace Square's transformation from an industrial and arts enclave into a hub for education, technology and innovation.

The pending deals underscore how AI companies continue to be a source of large-scale office demand in San Francisco, though that demand has been largely focused on Mission Bay. That neighborhood long anchored the city's life sciences and biotech companies, but has more recently attracted AI pioneers such as OpenAI, whose presence is drawing a wave of startups seeking proximity to talent, modern campuses and infrastructure — transforming the area into a burgeoning AI cluster.

Showplace Square sits just west of Mission Bay, separated by Highway 101, and has long been defined by its industrial roots. The area saw growth during the city's last tech boom, as tenants absorbed former warehouses, with companies such as Airbnb and Zynga calling the neighborhood home.

But the pandemic reversed much of that momentum: Zynga began shrinking its footprint amid shifts to hybrid work, listing much of its 185,000-square-foot office for subleasing in 2021. By 2022, the company had vacated that headquarters, relocating to a significantly smaller office in San Mateo.

Airbnb also drastically cut back on office space in the area: The company once occupied a sprawling, multi-building campus that spanned some 600,000-square feet across properties such as 650 Townsend, 888 Brannan, 999 Brannan, 808 Brannan and 650 7th St. Today, 888 Brannan is the only building still occupied by the short-term rentals platform as its global headquarters — the company's lease there was set to expire this year, but Airbnb recommitted to the building for another decade last October.

A spokesperson for Airbnb declined to comment on the pending lease deal with Physical Intelligence when contacted Thursday.

Physical Intelligence won't be the first AI startup that Airbnb has lured to one of its excess buildings: In 2024, Scale AI subleased roughly 175,000 square feet at 650 Townsend St.

Showplace Square borders the city's Design District — long home to galleries, furniture showrooms, and art studios — which also is about to gain a major new tenant: Vanderbilt University. The Nashville-based school will open a full-time campus on the site of the California College of the Arts after the school closes at the end of the 2026‑27 academic year.

The move preserves the property's educational use but ends CCA's decades-long presence in a neighborhood, which has historically blended creative, design and industrial tenants. CCA is the Bay Area's last remaining college dedicated to the arts.

"Our goal, in a sentence, is to create a place that creates creators," Vanderbilt Chancellor Daniel Diermeier said when the move was announced earlier this month, stating that the new campus' programming will have a technological as well as a creative focus.

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