Love it or hate it, artificial intelligence is reshaping California | Opinion
For California, the Bay Area has long been a proving ground for technological revolutions. At the moment, the explosion of the artificial intelligence industry — as controversial as it is to some — is super-charging a state economy that could be stalling otherwise.
This is just the latest example of Silicon Valley reinventing itself yet again over the past seven decades. The valley has done so in waves — from semiconductors, to personal computing, the internet, mobile and cloud technologies. Each cycle unleashed new industries, created millions of jobs and reshaped the physical and cultural landscape of the region.
But what truly distinguishes this moment is the pace of change and the unprecedented scale of investment. It is a new and exciting cycle breathing life back into the Bay Area’s commercial property market — an ecosystem which many had written off as struggling in the wake of the pandemic.
The numbers are striking: US Venture investment in AI startups reached $115 billion in the first half of 2025 alone, and the San Francisco Bay Area captured 71% of that capital.
Meanwhile, “Big Tech” is expected to pour an additional $300-325 billion this year into AI infrastructure, including data centers, computing power and workspace for the expanding workforce driving this revolution.
The effects of this cycle are already visible on the ground: San Francisco just recorded its strongest leasing quarter since 2019, with 2.7 million square feet signed in the second quarter of this year alone. Tenant demand is rapidly approaching pre-pandemic peaks. AI firms are projected to lease up to 16 million square feet over the next five years, reshaping the urban core and fueling demand in surrounding communities in doing so.
The ripple effects of all this prosperity will be felt far beyond this city or region.
Absent this AI-driven surge, Northern California and the Greater Bay Area might be mired in record-high vacancies, declining rents and a continued erosion of their innovation edge. A struggling Bay Area has ripple effects in Sacramento, part of an emerging mega-region.
For California, Silicon Valley’s latest reinvention has come in the nick of time.
Make no mistake: The Bay Area’s commercial real estate recovery is no coincidence. History has shown that in Silicon Valley, capital flows translate directly into job creation and property demand.
But the AI boom is not just about the AI sector, it is driving productivity gains for all technology sectors and is spawning entirely new industries. From biotech powered by machine learning to quantum-enabled security systems and fully autonomous robotics, the frontier technologies of this era will require both talent and space.
It is also important to recognize that Silicon Valley and San Francisco are now one and the same.
Once thought of as separate ecosystems, the innovation economy and commercial real estate market now span the Bay Area from San Jose to San Francisco seamlessly. This convergence is a natural evolution in a cycle that is both larger, faster and more transformational than any before it.
The Bay Area has once again proven that reports of its demise were premature. The intelligence revolution is here — and it is redefining both technology and the built environment.
For those willing to embrace this cycle, the future is nothing short of extraordinary.
Barry DiRaimondo is co-founder and chief executive officer of SteelWave, a commercial real estate developer.
This story was originally published September 24, 2025 at 5:00 AM with the headline "Love it or hate it, artificial intelligence is reshaping California | Opinion."