AI Data Firm Inks Top San Francisco Office Lease

Office building owners in San Francisco who have been hoping that the artificial intelligence boom—the city is the leading global AI tech hub—will drive a recovery of the beleaguered office sector got a bright green shoot of hopeful news this week.

Scale AI, a San Francisco-based artificial intelligence data-scaling company, has inked a deal to sublease three floors, or about 180K SF, from Airbnb in Showplace Square.

The deal for the space at 650 Townsend Street-the largest office lease completed in San Francisco so far this year-more than triples the footprint of Scale’s existing HQ in the city, according to a report in the San Francisco Business Times.

The AI data player, which has been operating out of about 50K SF at 155 5th Street in the South of Market neighborhood, announced this month that it drew $1B in its latest fundraising round at a $14B valuation, the report said.

According to the report, Scale’s new lease runs for 7.5 years, which is past the 2027 expiration date of Airbnb’s lease in the building.

Scale AI is focused on what its name implies: scaling up large language models, which involves processing prodigious amounts of data. Alexander Wang, CEO and founder of the company, describes the process as “data abundance.”

“Our vision is one of data abundance, where we have the means of production to continue scaling frontier LLMs many more orders of magnitude,” Wang said, according to the report. “We should not be data-constrained in getting to GPT-10.”

Large office lease deals by leading AI players have been the brightest beacons of hope in the San Francisco office market, which is still struggling with a vacancy rate that measured close to 37% at the end of Q1 2024.

Last fall, ChatGPT-maker Open AI cut a deal to sublease two buildings at Uber’s Mission Bay headquarters complex, taking nearly a half-million square feet in the largest office lease since 2018.

In September, Open AI chatbot competitor Anthropic inked a deal to sublease Slack’s 230K SF headquarters in downtown San Francisco.

The building at 650 Townsend Street has ridden the crest of tech waves in San Francisco for more than a decade. In 2012, it was purchased by social and mobile game maker Zynga for $228M. Zynga sold the building in 2019 to its current owner, Beacon Capital Partners, for $600M.