A closely watched lease deal between a ride-hailing behemoth and a fast-growing company that is at the forefront of San Francisco’s burgeoning artificial intelligence boom has made it over the finish line.
A spokesperson for Uber confirmed on Thursday that it has leased two of four buildings that make up its Mission Bay headquarters campus to OpenAI, the maker of ChatGPT and DALL-E 2.
In a market where few new leases — particularly for large blocks of space — have been signed in the wake of the pandemic, the sublease deal is one of the most significant transactions to have closed in recent years.
“We are glad that in a competitive office real estate market, our employee-friendly, award-winning and sustainable buildings clearly stood out,” Uber’s spokesperson told the Chronicle. “By right-sizing our space needs we can bring our teams closer together, exercise rigorous cost management, and bring more foot traffic to the businesses of Mission Bay. This is a win-win-win.”
The spokesperson confirmed that OpenAI will be moving into 1455 and 1515 Third St., taking a total of 486,600 square feet. That’s about 40,000 square feet more than the company was reported to be in negotiations for earlier this month.
Uber’s spokesperson said that the company will continue to occupy the two other buildings on its campus, located at 1655 and 1725 Third St. The company will shift its focus to expanding its other campus in Silicon Valley.
“The remaining buildings contain more than enough capacity for current Uber employees in San Francisco, with sufficient room to grow, and we also plan to also expand our Sunnyvale campus,” the spokesperson said.
OpenAI has leased space in Uber’s headquarters on Third Street in San Francisco.
Santiago Mejia/The Chronicle
The lease transaction was facilitated by Raise Commercial Real Estate and Paul Hastings.
OpenAI currently leases 40,000 square feet at 3180 18th St. and 100,000 square feet at 575 Florida St. in the Mission District. The company confirmed on Thursday that it plans to maintain a presence in the neighborhood, but did not confirm whether it would hold on to both offices.
“We are leasing two buildings from Uber in Mission Bay, which will provide the space needed for our growing team,” said OpenAI spokesperson Hannah Wong. “We’re thrilled to continue scaling our company in San Francisco.”
The deal is a boon to San Francisco’s beleaguered office market, which according to real estate services firm CBRE recorded a 34.7% vacancy rate in the third quarter.
And while AI deals alone won’t solve the issue of high vacancy, real estate stakeholders are banking on it sparking more positive momentum in terms of leasing.
Mayor London Breed on Thursday applauded the transaction.
“OpenAI is at the forefront of an industry that is transforming the world, and I am proud they are expanding right here in San Francisco where they first started,” Breed said. “This major investment and commitment to our city sends a message that this city is the place to be if you want to be a part of what’s next.”
Multiple sources confirmed Thursday that another AI deal that has been in the works in recent months was signed this week: Anthropic has reportedly transacted on its bid to lease 250,000 square feet in the former Slack headquarters at 500 Howard St.
Slack owner Salesforce is an investor in Anthropic, which seeks to build more ethical AI tools. The company, which is currently located at 548 Market St., could not immediately be reached Thursday.
Because both deals — OpenAI and Anthropic — involved sublease space, the landlords of Uber’s campus and Slack’s headquarters had to give their consent, which prolonged negotiations.
Other AI firms, including Hive AI, Hayden AI and Tome AI, signed San Francisco office leases over the summer.
Reach Laura Waxmann: laura.waxmann@sfchronicle.com
