Why You Shouldn't Be Paying the AI Startup Rate

The San Francisco office market is white hot. Demand is at a record high. Huge AI companies like OpenAI and Anthropic grab headlines when they take down entire buildings. But it’s the steady surge of smaller startups that pushes demand to its current highs.  

38% of the leases completed in Q1 2026 were with AI companies. At the top end, these companies are competing for large blocks (such as Anthropic’s lease of all of 300 Howard Street), a market that is increasingly scarce.  At the low end, series A and B startups are scrambling to secure well-located, pre-built (even furnished) spaces they can lease immediately. Speed is a key driver. They will pay a premium for occupancy-ready space.

Both ends of the AI demand spectrum present risk to the landlord.  Many of these companies end up paying a risk premium.  The rents they pay define the market.  Beneath the surface, landlords are aware of the risk. Even OpenAI, the largest AI tenant in San Francisco, is high risk due to its massive compute spend, which requires it to continue raising large rounds of funding.

Your profitable, stable company presents a decidedly different risk profile to the landlord. You should not be paying the risk premium. We’re beginning to see landlords favor stability. After all, this is San Francisco. The market has a long history of boom-and-bust tied to tech demand. The key is to negotiate from a position of strength, aligning your occupancy with stability. Let the guys with 12 months of burn pay the premium.