One of the largest names in the artificial intelligence slice of the tech industry is getting even bigger, delivering its latest boost to a recovering office market with a deal to more than quadruple its Seattle-area hub.
OpenAI has finalized a deal to expand in a downtown Bellevue, Washington, office tower by another roughly 223,130 square feet, according to people with knowledge of the agreement. The lease, finalized this week, catapults the San Francisco-based ChatGPT maker's space in the City Center Plaza building to more than 272,000 square feet, signaling that the AI-fueled leasing boom rippling across the country is establishing firmer roots in the Seattle area.
OpenAI initially signed on for two floors at the City Center Plaza tower at 555 110th Ave. NE last July to make its Seattle-area debut. The hub is primarily used to house the company's engineering team and strengthen its ties to Microsoft, one of OpenAI's closest business partners and investors.
Microsoft had coincidentally occupied the entirety of the downtown tower up until 2022 as part of plans to shed extraneous real estate and consolidate operations at its expanded corporate headquarters in nearby Redmond, Washington.
Microsoft, meanwhile, is in talks to deepen its OpenAI investment as part of an upcoming funding round totaling some $100 billion that could value the AI company at $750 billion. Amazon, another tech giant based in the Seattle area, is reported to be involved in that funding round as a new OpenAI investor.
Seattle is still grappling with a staggering office availability rate, but expansions among companies such as OpenAI are delivering a boost of optimism that a turnaround is closer than ever.
The Bellevue area, in particular, has been a standout compared to the broader Puget Sound region as it has solidified its reputation as an attractive tech hub. The area's vacancy rate climbed to more than 23% last year but is expected to find more stable ground in the months ahead as tenants look to the city's newer office stock as a more desirable landing spot compared to the rest of the Seattle area.
Despite all of the recently constructed space, downtown Bellevue landlords have been able to command some of the highest rents in the Seattle area, often at a premium 45% higher than the rest of the metro, according to CoStar data.
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OpenAI's additional Bellevue space spans nine complete floors in the 574,970-square-foot tower. Once fully occupied, OpenAI will serve as the property's anchor tenant and will fill the top 11 levels of the 26-story building.
The deal is the latest in a string of blockbuster leases OpenAI has signed over the past couple of years as it races to cement its standing at the forefront of the global AI boom.
In the San Francisco Bay Area alone, the ChatGPT maker has rapidly expanded its real estate portfolio to encompass upward of 1 million square feet of office space, a majority of which is concentrated around its Mission Bay headquarters and has been added within the span of less than two years.
It subleased about half a million square feet from rideshare giant Uber in 2023 and, less than a year later, signed on to fill the entirety of Old Navy's former 315,000-square-foot headquarters at 550 Terry A. Francois Blvd.
What's more, the AI giant is currently negotiating up to 250,000 square feet of additional space it plans to sublease from Dropbox at 1800 Owens St. as well as another roughly half a million square feet in Silicon Valley's Mountain View, California. Those deals have yet to close.
Representatives for OpenAI did not immediately respond to CoStar News' requests for comment.
The Seattle expansion is the latest indicator that the momentum fueled by demand among AI companies is spilling over from tech-concentrated hubs such as Silicon Valley and San Francisco into other markets.
Occupancy across the nation's office properties is growing at the highest levels since mid-2019, according to CoStar. That's in part due to strong dealmaking activity, with the technology sector representing roughly one-fifth of all office leases signed this year, according to CBRE.
Tenants such as OpenAI, Anthropic, Harvey AI, Nvidia, among others have opened hubs in cities such as New York, Washington, D.C. and Philadelphia, often starting with smaller amounts of space only to add more — sometimes within a matter of months.