Growing demand for AI talent has led to a surge in office space acquisitions
OpenAI, the company behind ChatGPT, is spearheading a resurgence in office real estate among tech companies, signing its first New York lease as it continues its rapid expansion.
The San Francisco-based artificial intelligence (AI) leader has signed a lease for 90,000 square feet in the Puck Building in Manhattan’s SoHo district, according to sources familiar with the matter.
This New York deal follows OpenAI’s real estate growth on the West Coast. Last month, the company took over Old Navy’s former San Francisco headquarters, adding 315,000 square feet to its footprint. This was the largest office lease in San Francisco this year, according to CoStar. It followed OpenAI’s subleasing of two buildings from Uber in San Francisco’s Mission Bay in 2023, making it one of the largest office tenants in the city.
Overall, OpenAI now occupies around 1 million square feet of office space across the San Francisco Bay Area. This aggressive expansion, driven by the rising demand for AI technology and talent, has been fueled by the company’s recent $6.6 billion funding round, which brought its valuation to $157 billion.
Boosting office demand
OpenAI is part of a larger wave of AI companies, including Anthropic, ScaleAI, and Palantir, that are driving office leasing in tech hubs like San Francisco and New York. San Francisco has been a hotspot for AI firms, as the region is home to about one fifth of the nation’s AI talent, according to CBRE.
Additionally, AI companies accounted for 25% of San Francisco office leases in 2023, JLL reported, and the sector has helped fill millions of square feet in the city.
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OpenAI’s New York expansion comes as the company continues to add to its workforce. Last year, it employed around 400 people in San Francisco, but its headcount has since grown to more than 1,000. The company expects to hire at least 500 more employees across its US and international offices by the end of the year.
“The demand for AI talent has risen dramatically,” Colin Yasukochi, executive director of CBRE’s Tech Insights Center in San Francisco, told CoStar. “And that’s not expected to stop anytime soon.”
While AI technology is often seen as a force behind the shift to remote work, OpenAI and other AI firms maintain office mandates, requiring employees to work in-person several days a week. This policy has further driven their need for physical office spaces.
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