AI Boom Drives Office Leasing Surge in San Francisco Bay Area

Record investment in artificial intelligence is accelerating a rebound in office leasing across the San Francisco Bay Area, reinforcing the region’s position as the epicenter of AI innovation, according to CBRE’s latest Tech Gateway Office Markets report.

Tech and AI companies leased over 14 million sq. ft. of space in San Francisco and Silicon Valley combined in 2025, accounting for 55% of total leasing activity. AI companies leased roughly 21 million sq. ft. of space in San Francisco and Silicon Valley since 2019 – equivalent to 15 Salesforce Towers – highlighting the scale of growth driven by the technology in the region.

The resurgence is part of a broader national trend, with technology companies leasing 36.7 million sq. ft. in 2025, representing 16.8% of total U.S. office activity, and expanding further to 22.7% in Q1 2026, fueled largely by major AI deals.

“San Francisco and Silicon Valley remain the epicenter of the AI boom, and that leadership is translating directly into office demand,” said Colin Yasukochi, Executive Director of CBRE’s Tech Insights Center. “As AI continues to scale, the jobs it creates will be concentrated in innovation hubs like the San Francisco Bay Area, supporting sustained leasing activity and long-term growth in these markets.”

AI companies have attracted $578 billion in venture capital funding since 2019, with the San Francisco Bay Area capturing about 80% of that total, far outpacing all other U.S. markets. This capital influx is driving both hiring and expansion by startups and established tech firms alike.

The impact is already visible in market fundamentals. San Francisco has experienced one of the most significant improvements in occupancy among major office markets, with vacancy declining and net absorption exceeding 3% of total inventory and a rent increase of 2.1% in 2025.

Within the Bay Area, demand is especially concentrated in high-quality, well-located office buildings and innovation clusters, where proximity to talent, venture capital and research institutions continues to influence leasing decisions.

The report also finds that AI-related office demand is expected to grow further. Both San Francisco and Silicon Valley have more than five million sq. ft. of active tenant demand from tech and AI firms currently in the market, signaling continued expansion in the near term.

Globally, the technology sector is entering what CBRE describes as the early stages of a new growth cycle driven by AI, with significant implications for hiring, capital allocation and real estate strategy. As companies invest heavily in AI infrastructure and talent, leading markets like the Bay Area are expected to capture an outsized share of that growth.

“The Bay Area’s combination of capital, talent and innovation ecosystem is unmatched,” said Steffen Kammere, Executive Managing Director, Northern California and Reno, CBRE. “That foundation positions it to remain at the forefront of AI development and the resulting office demand for years to come.”