San Francisco’s office market continues to see the AI industry boost leasing activity. Fast-growing AI startup Sierra has expanded its leased space to 82,000 square feet at 235 Second St. in the South of Market (SoMa) district — doubling its previous footprint of 41,000 square feet that it secured last July in Birmingham Development’s 267,000-square-foot building, as first reported by the San Francisco Business Times.

Founded by former Salesforce Co-CEO, Bret Taylor, and ex-Google executive, Clay Bavor, Sierra’s expansion is part of a visible push from technology-focused tenants. According to the San Francisco Business Times, AI tenants represented nearly half of all tech leasing activity this year, accounting for 21% of total leasing in 2024.

Other notable transactions in the market include OpenAI’s 315,000-square-foot lease at 550 Terry A. Francois Blvd. in Mission Bay, complemented by its 485,000-square-foot Uber sublease and ScaleAI’s 180,000-square-foot sublease at 650 Townsend St. Collectively, AI companies now occupy up to 4.7 million square feet of office space in San Francisco. 

Despite these deals, overall vacancy rates in San Francisco remain elevated: As of January 2025, the office market recorded a vacancy rate of 29.3% — the highest among all major U.S. markets and marking an increase of 560 basis points over the previous year. According to CommercialEdge’s latest office report, this rate is significantly above the national average of 19.7%.