AI and Academia Reshape San Francisco's Showplace Square, Signaling a New Chapter for Office Market
San Francisco's commercial real estate landscape is finding its next act not in retreat, but in artificial intelligence and academia. Showplace Square, a neighborhood that came to epitomize the city's pandemic-era office pullback, is now at the forefront of a cautious recovery, with two major AI companies finalizing substantial leases and a top-tier university planting its flag.
According to multiple sources familiar with the negotiations, Together AI is in advanced talks to lease approximately 150,000 square feet at 2 Henry Adams. Concurrently, robotics AI startup Physical Intelligence is nearing a deal for about 60,000 square feet at 808 Brannan Street, a building being subleased by Airbnb. Neither company immediately responded to requests for comment.
The potential deals underscore a pivotal shift. Together AI, a developer of open-source generative AI models backed by over $500 million in funding, and Physical Intelligence, a Mission District-based robotics firm valued at $5.6 billion, represent the vanguard of a new tenant class. Their moves, alongside Vanderbilt University's planned full-time campus on the site of the departing California College of the Arts (CCA), signal a broader reinvention of Showplace Square from its industrial and artistic roots into a hybrid hub for technology, education, and innovation.
"This is precisely the kind of diversified demand San Francisco needs," said Marcus Chen, a commercial real estate analyst with Bay Area Insights. "It's not just one industry betting on the city. We're seeing AI, which is currently driving most of the large-scale demand, strategically colocate with a major educational institution. This creates a talent and idea pipeline that can sustain growth beyond market cycles."
The activity marks a notable geographical expansion. While the adjacent Mission Bay district has absorbed the lion's share of recent AI-driven demand—anchored by OpenAI and transforming into a dense AI cluster—Showplace Square, situated just west across Highway 101, is now emerging as a complementary node. The neighborhood saw significant growth during the previous tech boom, housing companies like Airbnb and Zynga, before the pandemic triggered widespread downsizing and subleasing.
Airbnb's own consolidation exemplifies that retrenchment. Once occupying a sprawling campus exceeding 600,000 square feet across multiple Showplace Square buildings, the company now maintains only its global headquarters at 888 Brannan. Its decision to sublease 808 Brannan to Physical Intelligence follows a similar 2024 deal with Scale AI for 175,000 square feet at 650 Townsend, suggesting a strategic pivot to monetize excess space while attracting cutting-edge tenants.
An Airbnb spokesperson declined to comment on the pending lease with Physical Intelligence.
The transformation, however, is not without its critics and costs. The arrival of Vanderbilt, while preserving the site's educational use, concludes 119 years of history for CCA, the Bay Area's last standalone arts college. This shift highlights the ongoing tension between San Francisco's creative identity and its economic evolution.
"It's a devastating loss wrapped in a shiny 'innovation' package," argued Priya Sharma, a local artist and CCA alumna, her tone sharp with frustration. "They're trading a unique, generations-old arts institution for another tech-saturated campus and more AI labs. This isn't transformation; it's homogenization. We're erasing the very creative texture that made this area interesting in the first place to make room for more billion-dollar models chasing the same hype cycle."
Other observers see inevitable change. David Park, a small business owner in the Design District, offered a more measured perspective: "Change is constant here. The galleries and showrooms aren't disappearing; they're getting new neighbors. Vanderbilt talks about blending technology and creativity. If they do it right, and if these AI companies engage with the community, this could bring a new, sustainable energy that benefits everyone."
As Chancellor Daniel Diermeier stated when announcing Vanderbilt's move, the goal is to "create a place that creates creators," with a focus on both technological and creative disciplines. The coming years will test whether Showplace Square can successfully fuse its past with this ambitious new future.