- Vercel has signed a lease for 42,150 SF at 201 Mission St., moving into space vacated by Indeed.
- The deal contributes to a broader trend of AI firms absorbing large blocks of sublet space across San Francisco.
- AI companies have now expanded their collective footprint in the city to over 5M SF, helping push down vacancy rates.
- San Francisco’s sublease rate has declined by 30% in the last two years, a sign of renewed office market momentum.
AI Demand Drives A Comeback
Vercel is a fast-growing cloud platform for web developers. The company has signed a deal to relocate its corporate headquarters, reports CoStar. The new office will occupy the second and third floors of 201 Mission St. in San Francisco’s SoMa district. The nearly 42,150 SF lease backfills space left by Indeed and extends through April 2028.
The move represents a significant expansion for Vercel, which previously occupied a smaller footprint at 100 First St. The company has scaled rapidly over the past few years, reaching a $3.5B valuation and growing its workforce to 800 employees.
Filling The Void
Vercel’s expansion is part of a broader AI-led revival in San Francisco’s beleaguered office market. Following years of high vacancies caused by the pandemic, layoffs, and remote work, AI companies are now among the largest demand drivers for office space.
According to CBRE, AI tenants have leased more than 5M SF in the city over the past couple of years. That number could exceed 21M SF over the next five years — enough to cut the city’s office vacancy rate, currently at 23%, by half.
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A Trend Gains Momentum
Other recent expansions include:
- OpenAI, which has leased nearly 800K SF from Uber and is reportedly seeking up to 300K more.
- Harvey AI, which took over 92K SF at 201 Third St. earlier this year.
- Motive, which signed a smaller deal at Twitter’s former headquarters in the Mid-Market area.
These deals highlight the rapid growth of AI firms in San Francisco. Startups are quickly absorbing some of the city’s largest blocks of sublet space. This activity is reversing a trend that once gave San Francisco one of the highest sublease availabilities in the country.
Why It Matters
San Francisco’s office market has been among the hardest hit in the country, with downtown vacancy rates exceeding 30% at their peak. But with AI companies scaling up and betting big on the city’s tech ecosystem, the sublease surge is showing signs of slowing.
As AI continues to drive leasing activity, real estate stakeholders are increasingly optimistic that San Francisco is turning a corner — one SF at a time.
