Microsoft-backed artificial intelligence power player OpenAI is on the hunt for an office in Bellevue with room to grow, a move that may highlight the region’s role in the AI boom.
The company behind ChatGPT, an AI-powered chatbot, is searching for as much as 40,000 square feet of office space with the potential to more than double that footprint, according to three commercial real estate industry sources speaking on condition of anonymity to protect business relationships.
OpenAI did not respond to a request for comment.
The Seattle area’s largest tech companies, Amazon and Microsoft, have already wrapped their arms around AI. Microsoft has reported boosted revenue over the last couple of fiscal quarters since it rolled out its Copilot program, an AI assistant that pairs with its business and office products for an upcharge.
Amazon launched its AI shopping assistant Rufus on Friday to all U.S. consumers and has been investing in the technology for its cloud division Amazon Web Services.
Seattle’s startup ecosystem is also embracing the AI wave. Kirby Winfield, founder and general partner of Seattle-based venture capital fund Ascend, said they’re seeing an influx of what he calls AI-native software startups. Those are companies with AI products and services that are built to fix industry-specific problems made by tech giants.
A talent magnet like OpenAI coming into the market can be exciting but can also pose a problem.
“It’s incredibly good for the startup market, for bringing more potential entrepreneurs in,” Winfield said. “But it cuts both ways. If you have a massive company set up shop, they are going to be paying a lot of money for AI engineering talent, which makes it difficult for startups to compete.”
As of November, OpenAI had 770 employees, according to The New York Times. The company was valued at more than $80 billion in February, when it reportedly completed a deal in which it would sell existing shares in a tender offer. In early 2023, a similar deal valued it at $29 billion.
While OpenAI hasn’t yet settled on a particular property, it has ruled Seattle out, according to one source familiar with the company’s search. The company’s website doesn’t say it’s hiring for roles in the Seattle area, but more than 50 OpenAI employees list the Seattle area as their location on LinkedIn.
OpenAI is also looking to expand at a time when traditional tech companies have already made the decision to shed office space in Bellevue and Seattle. Amazon, Microsoft and Meta have all backed out of millions of square feet of office space between them over the past two years.
But AI companies are filling up that space.
David Gurry, an executive vice president with commercial brokerage Kidder Mathews, said AI startups are regularly touring and leasing offices on both sides of Lake Washington.
Computer chip maker Nvidia, one of the most valuable companies in the world, already has a presence in Redmond, according to permit records.
“We’re seeing startups and tenants from outside of Seattle looking for space in Seattle,” he said. “I mean, seeing a company like Nvidia looking for space in South Lake Union shows a sign of strength in our market.”
UiPath, an AI and robotic automation company, recently grabbed two floors of former Microsoft office space in Bellevue’s Lincoln Square North tower. Not far from there, AI cloud company Snowflake subleased a whole building from Meta in Bellevue’s Spring District.
Since Amazon and Microsoft show no signs of needing more office space, the Seattle area could depend on a new batch of startups and out-of-town tenants that come with the AI boom.
South Lake Union’s availability rate, the percentage of space that’s being marketed, reached 18% last quarter, according to a report from commercial brokerage CBRE. Downtown Bellevue’s hit 28%, as Microsoft’s departure opened up huge vacancies.
Both submarkets are faring better than those surrounding them, but they’re still at unhealthy levels compared with 2019. The lack of office workers commuting back to the office are causing companies to either ditch space or cut down the footprint they have by as much as half, especially in Seattle.
“The more people we have walking down the streets, the safer they’re going to be and they’re going to help nearby retailers,” Gurry said. “So many of these startups, they’re hiring local people and they’re looking at space and thinking, ‘What’s next? Can I grow in this building and neighborhood?’”
OpenAI is based in San Francisco but already has a local connection. CEO Sam Altman has displayed a close relationship publicly with Microsoft CEO Satya Nadella since the Redmond-based tech giant invested $13 billion into the ChatGPT maker.
And when Altman was briefly ousted as CEO last year, Nadella announced he would join Microsoft to lead an AI division. By the end of a chaotic week in November, Altman was reinstated and Microsoft gained an observer role on OpenAI’s board of directors.
Microsoft on Wednesday ditched its spot on the board amid antitrust concerns over the relationship.
OpenAI’s most recent controversy involved Scarlett Johansson. The actress accused the company in May of using her voice for a product after OpenAI offered to work with her and she declined. The company denied it was her voice and temporarily shelved the project.
Altman made an appearance at the Microsoft Build conference the day after OpenAI said it would halt plans for the voice.
