An office building in downtown San Francisco's artificial intelligence-infused SoMa neighborhood is almost full after inking three leases.
The Swig Co., the San Francisco development and investment firm that owns 501 Second St., said that the century-old former warehouse at Second and Bryant streets in the South of Market area signed leases totaling 33,000 square feet, and that the building is 98% occupied.
New leases were signed by SignalFire, a venture capital firm for early-stage AI startups, and Contentful, a cloud-based "headless" digital content management system; both were in the building already as subtenants. And investment adviser Alkeon Capital Management has renewed its lease there.
Swig Co. Senior Vice President of Asset Management Stacia Keisner touted the "growing concentration of innovative businesses here." She said in statement that the leases speak to "the strength of our location, amenities, and long-term investment in a well-designed space that resonates with leading companies."
Last year, a total of 91,000 square feet of space was leased at 501 Second St., a seven-story building that was built in 1925 as a warehouse. The property underwent a total overhaul in 1985, which included a seismic upgrade and the addition of three floors and a rooftop terrace with views of the Oracle Park baseball stadium and the bay beyond.
Swig said it has upgraded the building's restrooms and added a workout and yoga studio and shower facilities, "popular tenant amenities that other SOMA office buildings notoriously lack."
Startups are flocking to the onetime industrial neighborhood South of Market Street, drawn by its proximity to freeways and relatively cheap rents in comparison to the Class A office buildings of the Financial District, said Chris Pham, a JLL senior analyst who tracks the artificial intelligence sector.
“The neighborhood has historically been a hotbed for startups,” Pham previously told CoStar News.
Startups spur office comeback
A string of AI leases has brought life back to the South of Market neighborhood, which during the pandemic years became known for its empty sidewalks and half-finished projects dating from the city’s last tech boom.
In recent months, explosive growth across the AI sector, coupled with many companies’ emphasis on in-person work, has translated into a procession of office deals that has helped reshape demand dynamics in many pandemic-battered cities.
In San Francisco alone, AI tenants are on the hunt for about 9 million square feet of office space, up from 6.5 million in early 2025, according to JLL.
AI tenants are seeking properties that can support their "ambitious expansion plans and avoid constraints on future growth," according to Nigel Hughes, a senior director of market analytics for CoStar. Tenant demand is approaching historic highs in San Francisco, where leasing activity is outpacing that of other major markets across the country.
Last month, artificial intelligence giant Anthropic leased an entire 25-story office tower in the heart of the SoMa District at 300 Howard St., in the latest sign of how the industry is helping resurrect the city’s pandemic-battered office market.
San Francisco’s availability rate still has a long way to go before it reaches anything close to equilibrium. The availability rate, at 24%, remains the highest in the nation, and the market has three times the space available as there was in 2019.
However, the presence of large quantities of high-quality unused space is helping to keep San Francisco at the forefront of the AI tech boom, allowing startups to plan for rapid growth without worrying about a future lack of office space to house their workers.