SAN FRANCISCO — In recent years, San Francisco’s image as a welcoming place for businesses has taken a hit.

Major tech companies such as Dropbox and Salesforce reduced footprints in the city by subleasing office space, while retailers including Nordstrom and Anthropologie pulled out of downtown. Social media firm X, formerly Twitter, vacated its Mid-Market headquarters for Texas, after owner Elon Musk complained about “dodging gangs of violent drug addicts just to get in and out of the building.”

While the city remains on the defensive, one bright spot has been a boom in artificial intelligence startups.

San Francisco’s 35.4% vacancy rate in the first quarter — among the highest in the nation — is expected to drop one to three percentage points in the third quarter thanks to AI companies expanding or opening new offices in the city, according to real estate brokerage firm JLL. The last time San Francisco’s vacancy rate dropped was in the fourth quarter, when it declined 0.2% — the first time since the COVID-19 pandemic, according to JLL.

“People wanted to count us out, and I think that was a bad bet,” said Mayor Daniel Lurie. “We’re seeing all of this because the ecosystem is better here in San Francisco than anywhere else in the world, and it’s really an exciting time.”

Five years ago, AI leases in San Francisco’s commercial real estate market were relatively sparse, with just two leases in 2020, according to JLL. But that’s since soared to 167 leases in the first quarter of 2025. The office footprint for AI companies has also surged, making up 4.8 million square feet in 2024, up from 2.6 million in 2022, JLL said.

“You need the talent base, you need the entrepreneur ecosystem, and you need the VC ecosystem,” said Alexander Quinn, senior director of economic research for JLL’s Northwest region. “So all those three things exist within the greater Bay Area, and that enables us to be the clear leader.”

AI firms are attracted to San Francisco because of the concentration of talent in the city, analysts said. The city is home to AI companies including ChatGPT maker OpenAI and Anthropic, known for the chatbot Claude, which in turn attract businesses that want to collaborate. The Bay Area is also home to universities that attract entrepreneurs and researchers, including UC Berkeley, UC San Francisco and Stanford University.

Venture capital companies are pouring money into AI, fueling office and staff growth. OpenAI landed last quarter the world’s largest venture capital deal, raising $40 billion, according to research firm CB Insights.

OpenAI leases about 1 million square feet of space across five different locations in the city and employs roughly 2,000 people in San Francisco. The company earlier this year opened its new headquarters in Mission Bay, leasing the space from Uber.

OpenAI began as a nonprofit research lab in 2015 and the people involved found their way to San Francisco for the same reason why earlier generations of technologists and people pushing the frontier in the United States are drawn to the city, said Chris Lehane, OpenAI’s vice president of global affairs in an interview.

“It is a place where, when you put out an idea, no matter how crazy it may seem at the time, or how unorthodox it may seem … San Francisco is the city where people don’t say, ‘That’s crazy,’” Lehane said. “They say, ‘That’s a really interesting idea. Let’s see if we can do it.’”

The interior of OpenAI’s new San Francisco headquarters in the Mission Bay neighborhood. (OpenAI)

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Databricks, valued at $62 billion, is also expanding in San Francisco. Databricks in March announced it will move to a larger space in the Financial District next year, boosting its office footprint to 150,000 square feet and more than doubling its San Francisco staff in the next two years. It pledged to hold its annual Data + AI Summit in the city for five more years.

The company holds 57,934 square feet at its current San Francisco office in the Embarcadero, according to CoStar, which tracks real estate trends.

“San Francisco is a real talent magnet for AI talent,” said Databricks’ co-founder and vice president of engineering Patrick Wendell. “It’s a beautiful city for people to live and work in and so we really are just following where the employees are.”

Several years ago, Wendell said his company was considering whether to expand in San Francisco. At the time, it was unclear whether people would return to offices after the pandemic, and some businesses raised concerns about safety and cleanliness of San Francisco’s streets. Wendell said his company decided to invest more in the city after getting reassurances from city leaders.

“People are seeing an administration that is focused on public safety, clean streets and creating the conditions that also says that we’re open for business,” said Lurie, who defeated incumbent mayor London Breed last November by campaigning on public safety. “We’ve said from day one, we have to create the conditions for our arts and culture, for our small businesses and for our innovators and our entrepreneurs to thrive here.”

Laurel Arvanitidis, director of business development for San Francisco’s Office of Economic and Workforce Development, said that the city’s policy and tax reforms have helped attract and retain businesses in recent years, including an office tax credit that gives up to a $1-million credit for businesses that are new or relocating to San Francisco.

On Thursday, Lurie announced on social media that cryptocurrency exchange Coinbase is opening an office in San Francisco after leaving the city four years ago.

“We are excited to reopen an office in SF,” Coinbase Chief Executive Brian Armstrong wrote in response to the mayor’s social media post. “Still lots of work to do to improve the city (it was so badly run for many years) but your excellent work has not gone unnoticed, and we greatly appreciate it.”

Santa Clara-based Nvidia is also looking for San Francisco office space, according to a person familiar with the matter who declined to be named. The news was first reported by the San Francisco Chronicle. Nvidia, which also has California offices in San Dimas and Sunnyvale, declined to comment.

“It’s because of AI that San Francisco is back,” Nvidia Chief Executive Jensen Huang said last month on the Hill & Valley Forum podcast. “Just about everybody evacuated San Francisco. Now it’s thriving again.”

But San Francisco still has challenges ahead, as companies continue to push workers to return to the office. While the street environment has improved, it will be critical for the city to keep up the progress.

Lurie said his administration inherited the largest budget deficit in the city’s history and they have to get that under control. His administration’s task is to make sure streets and public spaces are clean, safe and inviting, he said.

“We have work to do, there’s no question, but we are a city on the rise, that’s for sure,” Lurie said.

Times staff writer Roger Vincent contributed to this report.

A total of 15 whales, including 14 gray whales and one minke whale, have died so far in 2025, according to a joint press release from California Academy of Sciences and the Marine Mammal Center.

“The reason or potential reasons behind the massive spike in sightings this year are still being investigated by researchers,” the release said.

The latest death, a gray whale found in the San Francisco Bay Area on Wednesday, marked the sixth whale death in as many days.

Newsweek reached out via email to the California Academy of Sciences and the Marine Mammal Center on Saturday during non-working hours for more information.

Why It Matters

There has been “unusually high number of sightings” of whales in the region this year but there has also been an increase in deaths. The whale population has seen a 45 percent decrease since the 2019- 2023 Unusual Mortality Event (UME), according to the release.

A record-low number of newborn whales was also seen this year, causing concern among researchers for the long-term outlook for the North Pacific gray whales, following the second UME in a 20-year period.

“These whales basically left the Arctic with a half tank,” Giancarlo Rulli, a spokesperson for the Marine Mammal Center in Sausalito, recently told Phys.org about the other deceased whales discovered in the region.

“The food sources that they were normally accustomed to eating that were highly nutritious for this massive, 10,000–12,000-mile journey, had moved farther away due to climate change, and as a result, these whales were left to forage on food matter that was much less nutritious.”

What To Know

The whale on Wednesday was found near the Alamere Falls in Point Reyes National Seashore, the joint release said, which is about 30 miles northwest of San Francisco.

While some of the deceased mammals have been necropsied, others have either been too far decomposed or stranded in areas that are inaccessible, making it difficult to pin these deaths on one similar cause.

While it is not unusual to see whales in the region as they migrate, the number of deaths is the highest it has been, including in 2019 when 14 whales were found deceased in the UME, according to the release.

The number of deaths currently matches the record of 15 for all of 2021, the release said. At least three of these deaths have been attributed to suspected vessel strikes, but others remain undetermined.

The whales that have been spotted alive have been observed to be either regular size or emaciated.

There are a total of 33 confirmed gray whale sightings in the San Francisco Bay this year, compared to only six seen last year, with about a third of those whales remaining in the bay for about 20 days.

Whale carcasses have been found as far north as Alamere Falls, as far west as Farallon Islands and as inland as Berkeley.

What People Are Saying

The California Academy of Sciences and partners at The Marine Mammal Center said in the press release: “With San Francisco Bay serving as a shared space for commerce and increased gray whale activity, experts at the Academy and the Center note it’s vital that all boaters—from large commercial vessels to sailboats—be ‘whale aware’ and continue to slow down. Gray whales often have a very low profile in the water that can make them difficult to sight, unlike other coastal whales like humpback whales.”

What Happens Next

The results of the necropsy on the whale found on Wednesday are still pending, complicated by a number of factors due to “inaccessible locations that hinder full post-mortem investigations, as well as poor tissue quality from advanced decomposition, and the lack of available locations to tow for further investigation.”

Meanwhile, the whales that are alive are expected to be in “the bay for another one to two weeks before continuing their annual northern migration to arctic feeding grounds,” according to the release.

If people do see whales, they can report them through an app called Whale Alert or the Marine Mammal Center website. Sightings of dead whales should be reported to the Academy’s department of Ornithology and Mammalogy.