{"id":1004736016,"date":"2024-11-06T05:14:36","date_gmt":"2024-11-06T13:14:36","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004736016"},"modified":"2024-11-11T08:19:32","modified_gmt":"2024-11-11T16:19:32","slug":"how-ai-firms-revive-office-space-demand","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/how-ai-firms-revive-office-space-demand\/","title":{"rendered":"How AI Firms Are Reviving Office Space Demand"},"content":{"rendered":"\n<p>Notion is the latest AI technology firm to lease office space for its new headquarters in San Francisco. The deal includes 105,000 square feet across five floors within Brookfield Properties\u2019 Monadnock Building at 685 Market St., multiple media outlets reported.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><a href=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/11\/The-Monadnock-Building-e1730818385217.jpg\"><img loading=\"lazy\" decoding=\"async\" width=\"1000\" height=\"750\" data-attachment-id=\"1004735937\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/brookfield-properties-inks-105-ksf-relocation-in-san-francisco\/the-monadnock-building\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/11\/The-Monadnock-Building-e1730818385217.jpg\" data-orig-size=\"1000,750\" data-comments-opened=\"0\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;\\u00a9 Yardi Systems, Inc.&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"The Monadnock Building\" data-image-description=\"&lt;p&gt;The Monadnock Building. Image used in San Francisco Office Market Update &#8211; December 2024&lt;\/p&gt;\n\" data-image-caption=\"&lt;p&gt;The Monadnock Building is a historic office building in San Francisco. Image courtesy of CommercialEdge&lt;\/p&gt;\n\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/11\/The-Monadnock-Building-e1730818385217.jpg?w=1000\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/11\/The-Monadnock-Building-e1730818385217.jpg?w=1000\" alt=\"The Monadnock Building is a historic office building in San Francisco.\" class=\"wp-image-1004735937\" style=\"width:400px\" srcset=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/11\/The-Monadnock-Building-e1730818385217.jpg 1000w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/11\/The-Monadnock-Building-e1730818385217.jpg?resize=300,225 300w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/11\/The-Monadnock-Building-e1730818385217.jpg?resize=768,576 768w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><\/a><figcaption class=\"wp-element-caption\">AI startup Notion has leased 105,000 square feet at Brookfield Properties\u2019 Monadnock Building in San Francisco. <em>Image courtesy of CommercialEdge<\/em><\/figcaption><\/figure><\/div>\n\n\n<p>The space had been occupied by Uber, which put it up for sublease in 2019, according to the <em>San Francisco Chronicle<\/em>. The <a href=\"https:\/\/www.commercialsearch.com\/news\/brookfield-properties-inks-105-ksf-relocation-in-san-francisco\/\">new agreement<\/a> has a 10-year term, with options for Notion to lease additional space in the building. &nbsp;<\/p>\n\n\n\n<p>The U.S. is a global leader in AI and currently hosts 65 of the top 100 globally ranked AI company headquarters, Robert Martinek, director at EisnerAmper, told <em>Commercial Property Executive<\/em>.<\/p>\n\n\n\n<p>\u201cDemand for artificial intelligence has exploded over the past 18 months,\u201d Martinek said. \u201cWe can point to Nvidia and Open AI, two of the fastest-growing companies in the world over the past year.&#8221; A January brokerage Cushman &amp; Wakefield report found that AI-related tenants were looking for more than 1.5 million square feet of office space in New York City alone.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity has-very-light-gray-to-cyan-bluish-gray-gradient-background has-background is-style-wide\"\/>\n\n\n\n<p><strong>READ ALSO<\/strong>: <a href=\"https:\/\/www.commercialsearch.com\/news\/demand-for-ai-expertise-causes-tech-talent-to-switch-gears-cbre\/\">What the AI-Driven Hiring Surge Means for CRE<\/a><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity has-very-light-gray-to-cyan-bluish-gray-gradient-background has-background is-style-wide\"\/>\n\n\n\n<p>\u201cDuring the past few months, we have seen large leases to AI2 in Seattle, Scale AI in San Francisco and OpenAI in New York City. New AI companies are developing and deploying AI-powered apps, which should only <a href=\"https:\/\/www.commercialsearch.com\/news\/ai-will-probably-boost-office-demand-and-cre-at-large\/\">increase leasing activity in the future<\/a>,\u201d Martinek added.<\/p>\n\n\n\n<p>OpenAI, Scale AI and Anthropic have recently leased in San Francisco, which had a 37 percent vacancy rate earlier this year.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-ai-firms-drive-san-francisco-office-leasing-activity\">AI firms drive San Francisco office leasing activity<\/h2>\n\n\n\n<p> The San Francisco market has now exceeded 1 million square feet in AI office leasing volume for the second consecutive year, Alexander Quinn, JLL&#8217;s senior director of research, told <em>CPE<\/em>.<\/p>\n\n\n\n<p>Leasing activity from January to September was up 40 percent compared to last year, driven largely by demand from lease expiration tenants and AI companies, JLL\u2019s third-quarter research showed.<\/p>\n\n\n\n<p>Asking rents remained mostly unchanged over the quarter, while net effective rents have fallen to $68, marking a 33 percent drop from the 2019 highs. Trophy assets have been more resilient, declining by approximately 15 percent over the same period.<\/p>\n\n\n\n<p>\u201cA key trend driving San Francisco&#8217;s outlook is its strong economic fundamentals,\u201d Quinn said. \u201cFor example, VC funding here\u2014which fuels firms like Notion and so many more\u2014is the highest in the nation through the end of the third quarter at $21.7 billion (per Pitchbook Data).\u201d<\/p>\n\n\n\n<p>CommercialEdge data from June showed an <a href=\"https:\/\/www.commercialsearch.com\/news\/strong-development-activity-in-pricey-san-francisco\/\">upturn in San Francisco office projects<\/a> after a recent downturn had whacked office prices. The pipeline has now become one of the largest in the nation.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Brookfield Properties\u2019 latest deal in San Francisco underscores an emerging trend. <\/p>\n","protected":false},"author":3568,"featured_media":1004735937,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21784,21808,21742,21747,1609,51037,15],"tags":[],"class_list":["post-1004736016","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-brokerage","category-featured","category-latest","category-office","category-san-francisco","category-trends","category-west"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How AI Firms Are Reviving Office Space Demand - 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