Before the pandemic, a company relocating into new offices in downtown San Francisco was unlikely to merit a press conference attended by the mayor, a prominent state senator and a U.S. congressman.
But this city’s downtown is still clawing its way back from the aftereffects of the health crisis, which hit the city harder than any other major market in the United States. Now as tech workers and artificial intelligence startups return to the city’s office buildings, local leaders are trying to hammer the message that San Francisco is back.
“This city is on the rise, there is no question about it,” said Mayor Daniel Lurie at a ribbon cutting press conference to mark the new headquarters of Tubi, the free ad-supported streaming service owned by Fox, at 201 Third St. in the newly bustling SoMa neighborhood.
The streaming service announced plans in August to leave its previous headquarters in the city’s Financial District for a new address in the South of Market district, an industrial-turned-tech hub that’s become a magnet for AI startups lately.
The 11-year-old media company — known for its broad, eclectic catalog of viewing content ranging from classic movies to obscure sitcoms from the 1970s — recently moved from 315 Montgomery St. Its new offices are about 31,000 square feet, about the same size as its last space, but all employees are on the 12th floor, with open-beam ceilings and sprawling views of the city and the San Francisco Bay.
The move — though not an expansion or an AI firm — adds to a resurgence in office demand for San Francisco, specifically the city's SoMa neighborhood. As recent as last year, the area that runs south of the Financial District was deemed a “no show” zone by some of the city’s commercial brokers, due to large blocks of empty tech offices and concerns about crime and disorder.
But in the past two years, more than a dozen AI firms have move into the larger SoMa neighborhood, according to Chris Pham, a senior analyst with brokerage JLL. Tubi is the latest company, albeit not AI, to join a growing cluster in the bustling Yerba Buena district, which includes the Moscone Convention Center, the Yerba Buena Gardens and a list of notable art institutions that have struggled amid dropping foot traffic.
The city's office market still has a way to go before it nears pre-pandemic levels of demand, with the vacancy rate remaining among the highest in the country.
Workers return to the office
But on a sunny afternoon this week, the blocks around 201 Third St. hummed with pedestrians. Tourists snapped photos of Waymo robotaxis, and smiling pink-shirted workers from the Yerba Buena Partnership, a nonprofit neighborhood improvement group, picked up trash and swept sidewalks.
Inside the building, Tubi’s new 12th floor offices were decorated with bunches of purple and yellow balloons in the streamer’s signature colors and TV screens that said, “Welcome to your new home, tubies!” CEO Anjali Sud wielded a giant pair of golden scissors for the ribbon cutting christening the company’s new headquarters, and State Sen. Scott Wiener called San Francisco “the greatest city in the world.”
"There were a few years where people were doubting San Francisco, and we were getting a bad rap in the press," said Wiener. "Declaring San Francisco's obituary is a national pastime, but the city always rises up stronger than before."
Congressman Kevin Mullin, representing parts of the Bay Area Peninsula region, also spoke about the city's importance as a "hub of innovation."
The building at Third and Howard Streets is a 12-story glass-and-concrete box dating from 1982 that is now owned by Los Angeles-based Kilroy Realty. The common spaces feature minimalist, mid-century modern décor and sculptures and fixtures in bold primary colors. The ground floor houses a Starbucks and a Brazilian steakhouse, Fogo De Chao.
Neighbors include Harvey AI, a provider of automation services for the legal industry that’s occupying 92,000 square feet across three floors; and Amplitude, a digital analytics platform that decided this year to stay on in the building after subleasing almost two full floors — nearly 60,000 square feet — from food delivery service Postmates in 2021, according to regulatory filings.
Getting back to 'being the greatest city'
Like other commercial property owners in San Francisco, Kilroy has struggled in recent years to rebuild its pre-pandemic occupancy levels. The city’s office vacancy rate of 23.2% remains one of the nation's highest due to forces that have prevailed since the 2020 shutdown, when workers disappeared from the city center and companies dumped space at record speeds.
However, leasing volumes reached their highest levels since 2019, with the number of new leases signed in the most recent quarter matching the average achieved during the 2010 and 2019 tech boom. In downtown San Francisco, the daytime office worker population has seen one of the biggest increases in the nation over the past year.
“Boosted by the AI sector's strong preference for in-office collaboration and more structured hybrid working policies by large employers, the downtown area is regaining some of the vitality that made it attractive to employers and workers before the pandemic,” said CoStar.
The flood of young tech workers returning to the city has also pushed rents up rapidly, with San Francisco now registering the highest annual rent growth in the nation.
Mayor Lurie has embarked on a charm offensive on social media and in person on behalf of the city.
“We are the most beautiful city in the world, and I’m telling you that we are closer to being back to being the greatest city in the world than most people think,” he said.