AI startups continue to drive deals in San Francisco’s SoMa District. The Swig Co., a development and investment firm, reports that its office building at 501 Second St. is now nearly fully occupied after signing three new leases.
The trend highlights the ongoing demand for office space among artificial intelligence companies in the South of Market area. According to The Swig Co., the century-old former warehouse at Second and Bryant streets signed leases totaling 33,000 square feet, bringing occupancy to 98%.
New tenants include SignalFire, a venture capital firm focused on early-stage AI startups, and Contentful, a cloud-based digital content management system; both were already subtenants in the building. Investment adviser Alkeon Capital Management has also renewed its lease. Swig Co. Senior Vice President of Asset Management Stacia Keisner said that the leases reflect “the strength of our location, amenities, and long-term investment in a well-designed space that resonates with leading companies”. She also highlighted the “growing concentration of innovative businesses here,” according to The Swig Co.
Last year, 91,000 square feet were leased at 501 Second St., which was originally built as a warehouse in 1925 and underwent major renovations in 1985. Recent upgrades include restroom improvements and new workout and yoga facilities—amenities described as popular among tenants but lacking in other local buildings.
Chris Pham, a JLL senior analyst tracking the AI sector, said that startups are attracted to South of Market by its proximity to freeways and lower rents compared to downtown’s Financial District. “The neighborhood has historically been a hotbed for startups,” Pham previously told CoStar News.
Despite an availability rate of 24%, which remains the highest nationally, large amounts of unused high-quality space are allowing AI firms to plan for growth. Last month, Anthropic leased an entire office tower at 300 Howard St., further signaling recovery in San Francisco’s office market.
