KPMG opened its new San Francisco headquarters yesterday at 505 Howard St., shrinking its office footprint by nearly a third even as it moved into the middle of the city's hottest commercial real estate corridor. The Big Four accounting firm now occupies 96,300 square feet across three floors, down from the 143,000 square feet it held for two decades at 55 Second St. before declining to renew that lease. Its new neighbors include Anthropic and Intuit, both of which also lease space in the same 10-story, 307,000-square-foot building known as Foundry Square III.
The move puts KPMG squarely inside what brokers and landlords have started calling “AI Alley,” a nickname now applied to the stretch of Howard Street where Anthropic has assembled an office empire exceeding 850,000 square feet across four buildings, according to The San Francisco Standard. Chris Cimino, head of KPMG's San Francisco office, said the firm's leadership had heard rumors that a well-funded AI company was preparing to move in before signing its own lease at 505 Howard St. in 2024.
Howard Street looked largely empty along the block straddling Salesforce Park as recently as 2022, after Fitbit, StubHub, and Slack all left the corridor. Anthropic arrived in the area in 2023, and its footprint has since grown to include two floors at 505 Howard St., roughly 200,000 square feet at 500 Howard St., and the entirety of 300 Howard St., a 466,000-square-foot tower that DivcoWest acquired at a steep discount in 2025 and is now renovating. The Southern Financial District's vacancy rate stands at 28%, according to Cushman & Wakefield.
From Empty Tower to Anthropic's Anchor Building
The turnaround at 300 Howard St. illustrates how quickly the corridor's fortunes shifted. A joint venture between DivcoWest and Blackstone Real Estate purchased the vacant 25-story tower, formerly known as 199 Fremont, for $111.3 million in April 2025 before leasing the entire 466,000-square-foot building to Anthropic in early 2026, according to The Real Deal. Hoodline reported on the full-building deal in February, and Blackstone's confidence in the block also surfaced in the firm's broader Bay Area investment strategy, including its $130 million purchase of the Four Seasons Hotel.
Anthropic has kept expanding since then. The company converted its initial 2023 sublease from Slack for 240,000 square feet at 500 Howard St. into a long-term direct lease with landlord Heitman in April 2026, after Slack vacated the building in 2023 to consolidate into Salesforce Tower, per CoStar. The company also leased roughly 100,000 square feet across three floors at 400 Howard St., known as Foundry Square I and previously anchored by BlackRock. That expansion followed a $30 billion funding round that pushed Anthropic's valuation to $380 billion in early 2026, with run-rate revenue climbing from $100 million in 2024 to $14 billion this year, according to Bisnow.
KPMG Bets Smaller, But Closer to the Action
Inside 505 Howard St., KPMG waited roughly a year for the existing tenant to vacate before construction began on its new office, which now has floor plates of about 35,000 square feet — larger than those at its previous headquarters even though the firm's total footprint shrank. The Standard's report describes design touches including sound-dampening ceiling tiles styled as a nod to Karl the Fog, a sixth-floor dining area with a painted-ladies motif, and expanded common areas and meeting spaces meant to encourage more interaction among staff.
The centerpiece of the new headquarters is KPMG's first Ignition Center on the West Coast, a dedicated floor available to clients that lets them travel to, work out of, and experiment with AI solutions. The center's living lab includes flooring made from rubber recycled from end-of-life Nike shoes. It joins an international network of Ignition Centers in cities including Chicago — the network's largest at 30,000 square feet — New York, London, Frankfurt, and Sydney.
A Citywide Recovery Concentrated Downtown
The Howard Street transformation is playing out against a broader shift in San Francisco's office market. Citywide vacancy fell to between 29.2% and 30.1% in the second quarter of 2026, down from 33.8% to 34.7% a year earlier, marking the largest year-over-year vacancy reduction of any major U.S. city, according to Cushman & Wakefield. AI companies accounted for 47% of all new office leasing activity in the city during the first half of 2026, surpassing the sector's entire 2.1 million square feet leased during all of 2025.
Still, that recovery remains heavily concentrated in prime corridors like the Southern Financial District and SoMa rather than spread evenly across downtown. The block of Howard Street between First and Second streets has gone from vacant to full again, but it remains an open question whether Anthropic's multi-building cluster will stay unified once its full-building headquarters at 300 Howard St. officially opens in 2027. For now, KPMG's smaller, denser office stands as one bet that the corridor's momentum is real — and that being neighbors with one of the world's most valuable startups is worth the shrunken square footage.
