In San Francisco, RTO and AI boom ignite fresh demand for office space
In San Francisco, the pandemic, the rise of remote work, and the disappearance of thousands of jobs in tech and other industries left the market for office space reeling in recent years. But thanks to the wave of RTO mandates and the AI boom, the city is enjoying an unmistakable real estate turnaround — something HR executives and other business decision makers with local interests are keeping an eye on.
The latest data tells the story. According to location intelligence platform Placer.ai’s March 2025 Office Index, San Francisco saw one of the largest increases in office traffic among all U.S. markets year over year, behind only Boston and Washington, D.C. Meanwhile, flexible and co-working space provider WeWork reported a March increase in footfall across Bay Area locations of nearly 5% YOY, with all-access bookings up by more than 20%. It’s a trend that’s lifting fortunes from Oakland to San Jose, while it’s got billionaire investors gobbling up properties across the region.
Meanwhile, the good news about office space dovetails with improvement in many of the social issues that have plagued San Francisco in recent times.
“2025 is going to be a monumental year for the Bay Area, primarily driven by large tech companies essentially demanding the workforce to come back to work,” said Elton Kwok, who, as a vp and gm at WeWork, oversees operations across the western U.S. and Canada. “In the past, it used to be an option. Now it’s a mandate, and that in itself is very, very different.”
This shift in fortunes isn’t just about corporate directives. A WeWork survey of 500 business leaders across multiple sectors found that 86% view the office as playing a more critical role in driving profitability and enhancing organizational culture over the next five years. The survey also revealed that for 4 in 5 fully in-office and three-quarters of hybrid companies, their workplace strategies have had a positive impact on employee productivity, compared to just two-thirds of remote organizations.
Despite RTO mandates, flexibility remains a critical component of many workplace strategies, aiding companies like WeWork. Its survey found that 72% of employers plan to expand their footprint over the next two years, with 3 in 5 planning to do so through flex or co-working locations.
San Francisco’s resurgence is being fueled not just by RTO but by a wave of AI companies and other employers looking to establish a physical presence in the area. “The Bay Area feels definitely like the Gold Rush again, with AI essentially being everywhere in the city,” Kwok notes, adding that at WeWork’s 201 Spear location in the Financial District, AI firms comprise more than half the member base.
Dan Sullivan, founder and head of R&D at Bay Area company Modwall, a maker of adaptable space systems, describes the local real estate market as “cautiously optimistic” with “more of a bias for action than we had before.”
Even with commercial vacancy rates still hovering around 35%, Sullivan sees an alternative story emerging. “We’re seeing more activity from tech firms returning in new, hybrid configurations and an uptick in creative sectors — from AI to architecture to digital arts — looking to replant roots in the city,” he said.
It’s not just about space being in demand but also about the reimagining of workspaces.
Another Bay Area company, Butlr, which provides spatial intelligence solutions, is part of the YesSF program, a public-private collaboration designed to revitalize the city sponsored by the World Economic Forum and its innovation initiative Uplink. Butlr’s sensors have played a role in that effort by providing insight into the city’s commercial buildings and how workers utilize the office.
“By understanding how buildings are used and the needs of employees, businesses have insight to make more impactful decisions about office layout and design,” said Honghao Deng, Butlr’s co-founder and CEO.
As noted, San Francisco’s recovery also encompasses sweeping revitalization efforts for a city that has come to be defined by chronic crime and homelessness. For example, Dan Biederman, president of Biederman Redevelopment Ventures, is leading an effort in Union Square and Salesforce Park to attract workers back downtown. “Just as important as building amenities in bringing employees back to the office are great public spaces that give employees diversion right near their offices,” he said.
His company’s initiatives include outdoor exercise classes, movie screenings and concerts — all designed to transform San Francisco’s neighborhoods into people magnets that also cater to modern workforce needs.
It’s a long way from the bleak headlines we’ve become accustomed to. As Sullivan puts it: “San Francisco has always been a crucible for reinvention. We thrive at the intersection of creativity and commerce, and that spirit is still alive … We don’t just return to glory, we redefine it.”