In the past two months, four AI companies have signed office leases in San Francisco, providing a boost to the struggling market. Despite a record-high vacancy rate of over 31%, these companies are choosing mixed-use neighborhoods outside of the city's downtown area. Hayden AI, for example, has leased 41, 196 square feet near South Park in South of Market. The growth in the AI sector is offering hope for San Francisco's economic recovery from the effects of remote work and the pandemic. Mayor London Breed has declared the city as "the AI capital of the world, " and according to the president of San Francisco-based OpenAI, it is the best place to start an AI company.

Hayden AI, known for developing AI-powered camera and mapping systems for traffic enforcement, expects to double its workforce of 89 employees within the next 18 months. Other AI companies such as Tome AI, Hive AI, and Anthropic are also looking to expand in San Francisco. Despite the recent increase in office demand attributed to the rise of AI, experts predict that the city's office vacancy rate will continue to rise throughout the year. However, there are ideas of repurposing older office spaces, which could potentially decrease the overall office space available and drive up rents. While the AI sector is growing, it has not yet reached a critical mass that will significantly impact the market.