Amazon has confirmed it will be leaving one of its main offices in San Francisco, freeing up roughly 130,000 square feet in the heart of the city’s financial district.
The space, internally known as SFO13, takes up more than half of the 12-story tower at 188 Spear St. The lease, originally signed in 2012, expires early next year, and Amazon already listed the space for direct lease last Friday — about ten months before the agreement officially ends.
In a statement to the San Francisco Chronicle, spokesperson Steve Kelly explained that the company regularly evaluates its corporate real estate to make sure it meets the needs of the business, its employees, and its customers. According to him, the priority now is bringing teams closer together and making collaboration across different parts of the company easier.
But there are two very different sides to this story.
Just three blocks away, the 181 Fremont tower is experiencing the complete opposite, with artificial intelligence startups competing for every available square foot in the building that Meta recently abandoned. Today, barely any floors remain vacant — a stunning turnaround for a building whose entire commercial space was on the sublease market less than three years ago.
This contrast pretty much sums up what is happening with San Francisco‘s commercial real estate market right now — a city that is simultaneously dealing with nearly empty buildings and others where there is hardly any room left for new tenants. 🏙️
What is behind Amazon’s departure
Amazon‘s decision not to renew the lease at 188 Spear St. did not come out of nowhere. Over the past few years, the company has gone through a significant restructuring of its work model, increasingly pushing for in-person attendance among its employees but in a concentrated way around strategic hubs. That shift naturally left some smaller regional operations without a cost justification, especially in cities where maintaining large offices is a major expense. San Francisco, with its historically high commercial rents even after the post-pandemic dip, fell into that category.
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Spokesperson Steve Kelly declined to comment on whether leaving the Spear Street building signals a possible consolidation of teams at the other two locations Amazon still keeps in the city: 525 Market St. and 660 3rd St. That lack of response leaves open the possibility that the company may be planning something bigger than simply letting an expiring lease go.
Another important factor is Amazon‘s own bet on artificial intelligence as the central axis of its operations. The company has been investing billions in developing AI models, expanding AWS services, and forging partnerships with startups in the space. This technological focus changes the profile of the teams the company needs to keep physically present, prioritizing hubs where the concentration of AI talent is greater and where research infrastructure is already established. San Francisco still has that human capital, but Amazon clearly decided it does not need more than half a dozen floors in the financial district to access it.
What is certain is that the listing means the 188 Spear tower could be headed toward near-complete vacancy. At the end of 2023, software analytics company New Relic, the building’s second-largest tenant, was already looking to sublease about half of the four floors it occupied. According to data from CoStar, a platform specializing in commercial real estate data, New Relic’s entire 55,000-square-foot office is now being offered for direct lease. The company did not respond to requests for comment, and the building’s owner, Shorenstein Properties, also declined to discuss the listings or its efforts to attract new tenants. The ground floor still has a Chase Bank branch in operation. 📉
The 181 Fremont tower and the new wave of AI tenants
Just steps from 188 Spear, 181 Fremont tells a radically different story. The sleek, glass-clad 57-story tower was completed in 2018 and houses about 435,000 square feet of office space below luxury condominiums. Connected to Salesforce Park by an elevated walkway, it has become one of the most coveted addresses in the city’s downtown.
Even before construction was finished, Facebook, now known as Meta Platforms, had leased the entire commercial portion of the building on a long-term deal running through 2031. At the time, the agreement symbolized the peak of Big Tech’s bet on San Francisco as a hub for growth and talent.
The tower made headlines again in early 2023, when Meta dumped all that space onto the sublease market, joining a long list of major companies that had embraced remote work during the pandemic. The downtown vacancy rate eventually surpassed 35% in the years that followed, but Meta’s space did not sit idle for long.
By late 2023, the building started attracting a series of smaller deals. Travel tech company Navan was the first to sign, taking about 36,000 square feet in October of that year. Zendesk and Strava followed shortly after, each claiming roughly 40,000 square feet spread across multiple floors.
Last year, artificial intelligence startup Mercor locked in a lease for three upper floors of the building, establishing its headquarters there after raising a $350 million funding round. That move signaled a clear shift: 181 Fremont was no longer dependent on a single tech giant and had become home to a more diversified tenant base made up mostly of next-generation AI companies. According to market sources, Mercor has been negotiating additional space in the building, although the deal has not been finalized yet.
And the AI presence in Meta’s former space just keeps growing. Cambridge-based Lila Sciences confirmed to the Chronicle that it claimed floors 35 through 38 for its artificial intelligence program, opening its first San Francisco office right there at 181 Fremont.
On top of that, a spokesperson for Meta itself confirmed the company subleased about 80,000 square feet this year to Perplexity AI, one of the largest chunks of sublease space absorbed so far. 🤖
San Francisco split between vacancy and fierce competition for space
The real estate paradox in San Francisco has never been more visible. On one side, entire towers with vacant floors gathering dust and racking up maintenance costs without generating any revenue. On the other, specific buildings where waitlists of interested tenants grow before a vacancy is even officially announced. 181 Fremont is the most recent and emblematic example of this second category.
This is no coincidence. San Francisco has become the global epicenter of the artificial intelligence race, and companies in this sector behave differently from the large tech corporations that dominated the city over the past decade. They grow fast, need physical space to set up labs, attract researchers, and build team culture, and many of them prefer to be close to one another to facilitate partnerships, hiring, and the informal exchange of ideas that happens when AI teams share the same environment. This creates concentrated demand at specific addresses, usually near accelerators and other industry hubs.
Robert Sammons, senior director of research at brokerage firm Cushman and Wakefield, noted that AI startups have been looking for move-in-ready spaces as quickly as possible. According to him, it is not just the smaller, fully built-out spaces that are getting snapped up fast. The larger blocks are also disappearing at speed. Sammons added that there is a certain anxiety among tenants, with a growing sense that the best spaces — both sublease and direct lease — are being absorbed faster and faster.
The result is a city with two real estate markets running in parallel. There is the market of large tech companies that matured, grew too big, and are now trimming their physical footprint, giving back spaces they claimed during the boom years of the 2010s. And there is the market of artificial intelligence startups, hungry for location, for the prestige of a great address, and for proximity to the innovation ecosystem that San Francisco still offers better than any other city in the world. These two markets coexist just a few blocks apart, creating an urban landscape full of contradictions you can see with your own eyes. 🏢
The new AI map of commercial real estate
What is happening in San Francisco is, in practice, a reorganization of the city’s economic map driven by artificial intelligence. The companies that defined the city over the past two decades — Meta, Uber, Dropbox, and now Amazon itself — have been leaving behind massive physical spaces as they adopted hybrid models, reduced headcount, or simply consolidated operations in other cities. In their place come names like Mercor, Perplexity AI, Lila Sciences, and dozens of smaller startups, all orbiting the same ecosystem and all with an appetite for high-quality, well-located office space with infrastructure capable of supporting compute-intensive operations and research.
This new cycle brings with it an important discussion about the future of work and physical space in the tech industry. For a long time, the debate revolved around remote work being the main villain behind empty offices. And it does bear some responsibility. But what San Francisco is showing in practice is that the issue is more nuanced than it seems. AI companies are moving in the opposite direction, pursuing an intense physical presence, collaborative offices, and geographic proximity to competitors and partners. This suggests the office is not dead — it is just being redefined by a specific sector that understands the value of co-presence when it comes to accelerating innovation.
For San Francisco‘s real estate market, this dynamic represents both a challenge and an opportunity. The challenge lies in converting spaces designed for large tech companies into formats that serve smaller, more agile startups with different needs around floor plans, infrastructure, and lease flexibility. The opportunity lies in the fact that, unlike other American cities that simply watched their commercial towers empty out with no prospect of recovery, San Francisco still has a powerful demand engine running. And that engine has a name: artificial intelligence. 💡
The office vacancy rate in San Francisco exceeds 30%, but buildings near AI hubs are reporting virtually full occupancy. The sublease inventory that once spooked the market is now seen as an opportunity, and the big question is whether older blocks like 188 Spear will be able to fill their floors at the same pace as the more modern, better-positioned towers.
So Amazon‘s move is far more than a company handing back the keys to an office. It is a chapter in a larger story about how technology is reshaping cities, workspaces, and the priorities of the companies driving the digital economy. And San Francisco, with all its contradictions, remains the place where that story is being written in real time. 🌉
