OpenAI signs South Bay office deal in huge expansion for tech company
The Big Picture
OpenAI has signed a 10-year lease for approximately 439,000 square feet of office space at 350 and 380 Ellis Street in Mountain View, marking a significant expansion of the company’s physical presence in Silicon Valley.
The deal covers two three-story buildings totaling about 264,700 square feet at 350 Ellis Street and 184,300 square feet at 380 Ellis Street. The lease also includes two six-year extension options and a right of first refusal to purchase the property, giving the company the ability to eventually own the campus.
The property has had a turbulent financial history. It was acquired through foreclosure in 2024 by KKR Real Estate Finance Trust after the campus lost significant value. The site was valued at about $120.6 million during the foreclosure process, roughly one-third of the $357.6 million investors paid in 2021.
The new office hub is expected to house several hundred employees as the artificial intelligence company scales its operations.
Why It Matters
The deal highlights how the AI boom is becoming one of the few bright spots in Silicon Valley’s office market recovery. After several years of high vacancy and distressed assets, large AI firms are beginning to absorb significant office space.
It also reinforces a geographic shift back toward the South Bay. While many AI startups initially clustered in San Francisco, large expansions by companies like OpenAI suggest Silicon Valley remains the center of gravity for AI infrastructure, talent, and research partnerships.
For the office market, the transaction sends another signal that high-quality tech tenants are returning, particularly in buildings that can accommodate large engineering teams. Analysts expect leasing momentum to continue improving through the decade, with some projections suggesting the South Bay office market could be significantly stronger by 2027 than it is today.