Artificial intelligence startup OpenAI is leaving its former San Francisco headquarters in a move that's less about space needs rather than one made in response to its public breakup with the company's co-founder, Elon Musk.
The tech company has drained its more than 37,100-square-foot hub in the Pioneer Building at 3180 18th St., space Musk leased on OpenAI's behalf before severing ties with the platform in 2018. An entity linked to the X, Tesla and SpaceX leader has listed the space in San Francisco's Mission District for sublease, according to marketing materials viewed by CoStar News.
JLL has been hired to help market the listing that's available through August 2026. An OpenAI spokesperson confirmed that the tech company no longer occupies the 18th Street space that housed its original headquarters up until last month.
The spokesperson said the company's accelerated growth and need for additional office space prompted its departure. However, OpenAI has found itself competing with xAI, a Musk-founded artificial intelligence startup, and fending off claims the billionaire has made alleging the platform has prioritized profit over public good.
The two sides have faced each other in court after Musk filed a lawsuit against Open AI earlier this year, claiming the company had violated its principles and accusing company executives such as CEO Sam Altman of breaching a contract to develop artificial intelligence for the common good. Musk withdrew the lawsuit in June before reviving it in federal court earlier this month.
The original lawsuit claimed that Musk Industries LLC leased OpenAI’s initial office space at 3180 18th “and paid the monthly rental expenses.” Additional details about the arrangement were not immediately available. A Musk representative did not immediately respond to CoStar News' request to comment.
Room To Grow
Even with the move to leave its Pioneer Building space, OpenAI's office footprint in San Francisco is far from any additional downsizing risk. In fact, the company has played a leading role in the sector's prominence as one of the biggest demand generators for space across the city's recovering market.
Artificial intelligence companies collectively occupied just shy of 2 million square feet by the end of 2023, according to JLL, the majority of which was concentrated in and around the San Francisco area. AI companies accounted for 25% of San Francisco office leases last year, and there are about 100 companies with up to 50 employees currently scouting office space in the city, according to JLL.
So far this year, about 15% of the office leases signed in San Francisco — filling about 400,000 square feet — have been deals with artificial intelligence companies, Rob Paratte, Kilroy Realty's chief leasing officer, told analysts earlier this month. Another 600,000 square feet or so is in late-stage negotiations, a pickup "driven by the need for space and bringing people back from home to the office."
For OpenAI, which requires in-person work at least three days a week, that has translated into a number of blockbuster deals the company has recently signed.
The ChatGPT maker is finalizing a deal to lease all 315,000 square feet at DivcoWest's 550 Terry Francois, a Mission Bay building just a few blocks from the half a million square feet the company subleased from Uber late last year. Open AI is also touring additional options in the neighborhood to keep up with headcount growth that has more than doubled this year.
The company is also scouting for space to house its first New York office. In addition to its headquarters and ancillary locations in San Francisco, OpenAI has hubs in Tokyo, London and Dublin.
Early last year, the company employed about 400 people based at the 18th Street office. Its headcount has since soared beyond 1,000 people, and OpenAI is expecting to add at least 500 people to its U.S. and international offices before the end of the year.