🏢 The Return of SF Commercial Real Estate??

Today’s newsletter is 513 words - a 3-minute read (5-minute if you take your time…🐌)

Welcome back everyone!

Excited to have you join us: We’re Chris & Nolan (@chrisnolansf), and welcome to SF Whisper - a newsletter covering the most interesting business and local news of San Francisco.

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Anyways. Let’s get started -

Is San Francisco Commercial RE Back??

Scale AI Expands into Previous Airbnb HQ

Artificial intelligence firm Scale AI is significantly expanding its presence in San Francisco by leasing a new office space at 650 Townsend St., previously part of Airbnb's headquarters. This move will more than triple their current 50,000-square-foot downtown office space to between 170,000 and 180,000 square feet. The deal, facilitated by brokerage CBRE, renegotiates Airbnb's sublease to a term of 7.5 years. Scale AI's founder, Alexandr Wang, recently recognized as the youngest self-made billionaire by Forbes, has driven this expansion following the company's substantial $1 billion funding round announced last week at a ~$14 billion valuation.

AI Sector Boosts San Francisco Real Estate

The expansion of Scale AI highlights the rapid growth of San Francisco’s AI sector, which has provided a much-needed boost to the city's commercial real estate market. Major deals include OpenAI's takeover of over 486,000 square feet of space from Uber and Anthropic's lease of Slack's former 230,000-square-foot headquarters. Despite these positive developments, the commercial real estate market in San Francisco remains challenged, with office vacancies exceeding 36% due to tech layoffs and the shift to remote work. Analysts like Robert Sammons from Cushman & Wakefield acknowledge the positive impact of AI firms but emphasize the need for broader activity to stabilize the market.

FTX Bankruptcy Probe Clears Sullivan & Cromwell of Conflict Concerns

No Errors Found

The investigation has cleared the law firm Sullivan & Cromwell (S&C) of any conflicts of interest in its role as bankruptcy counsel for the defunct cryptocurrency exchange FTX. The probe confirmed that S&C did not err in its appointment, having no prior knowledge of any misdeeds by FTX founder Sam Bankman-Fried, who was convicted of fraud last year.

Still Getting Rich

S&C has been the go-to lawyer for FTX pre-bankruptcy. Some of FTX internal legal counsels have had work experience at S&C. S&C has been representing FTX on the bankruptcy case has billed roughly $200m of fees to the FTX bankruptcy estate.

Lawyers are Getting Paid Well in the Aftermath of the Crypto Meltdown

Another example is Kirkland & Ellis, which is poised to earn more than $120 million for its work as lead counsel to 3 major crypto exchanges bankruptcies Celsius, BlockFi and Voyager.  

Catch up on the latest:

• Caltrain to extend into downtown SF with $3.4B boost (Link)

• Elon Musk favors no tariffs on Chinese EVs (Link)

Today’s whisper:

^{Someone ranked the best breakfast burritos in the city.
Now we are going to try them from top to bottom.}