KPMG bet on this block. Then, Anthropic made it 'AI Alley'

How KPMG ended up as neighbors with one of the world's most valuable startups -- and what it says about downtown's recovery.

To the typical passerby, Howard Street in the southern Financial District looked as dead as any other downtown corridor back in 2022. Slack, Fitbit, and Stubhub had cleared out, leaving office buildings empty along the block straddling Salesforce Park.

But Chris Cimino, head of KPMG's San Francisco office, saw something different. He and his leadership team heard rumors that an AI company, flush with capital, was about to move in. Landlords up and down the block were prepping, betting that they could woo tenants eager to be in the company's orbit.

So KPMG acted decisively. The Big Four accounting firm declined to renew its long-term lease at 55 Second St. -- the building adorned with its logo -- and grabbed three floors inside 505 Howard St.

"We knew this area was going to be the place to be," Cimino told The Standard ahead of KPMG's opening of its new headquarters Tuesday. "And we wanted to be in the mix."

That rumored AI company: Anthropic, which arrived in 2023 and has since turned the block into its own urban campus. In addition to two floors at 505 Howard St., the AI company occupies some 200,000 square feet across the street at 500 Howard St. and has agreed to take over the entirety of 300 Howard St. two blocks away -- a building DivcoWest acquired at a steep discount last year and is currently renovating.

Because everyone loves a rebrand, the area is being marketed by landlords, brokers, and even KPMG as "AI Alley."

Cimino called the opening of its office this week a "reintroduction" to a city he believes is undergoing a rebirth. KPMG signed its lease at 505 Howard in 2024 but had to wait roughly a year for the existing tenant to vacate before construction could begin.

It took time, but the hypothesis was proved correct. The new headquarters will host the firm's first "Ignition Center" on the West Coast -- a dedicated floor that will be available to clients to travel to, work out of, and experiment with AI solutions for their businesses. A client looking to overhaul a vendor management system, for instance, could come to the center for a week, whiteboard a program with KPMG consultants, and leave with a working prototype.

"More is possible now because of vibe-coding," Cimino said. "3D is always better than 2D."

Since KPMG has been proximate to ground zero of the AI boom, Cimino described his office as "client zero" for tools such as ChatGPT and Claude. He said the use of large language models is encouraged throughout KPMG and has increased what it can deliver to clients, especially in the realms of audit and presentations.

"Eighteen months ago, it was all about getting people to sign up and play around with the technology," he said. "Now, we're talking about implementation and scale of it within our processes."

While the Howard Street block between First and Second streets has flip-flopped from vacant to full again, the southern Financial District still has a vacancy rate of 28%, according to Cushman & Wakefield. The cluster of buildings occupied mostly by Anthropic is shared with software company Intuit, which also leased a floor at 505 Howard St.

KPMG's previous headquarters consisted mostly of cubicles packed together in the middle of a narrow building surrounded by private offices. The new office has larger floor plates, roughly 35,000 square feet, that allowed for the construction of expanded common areas and meeting spaces that can be quickly converted between professional and social use.

The design leans more whimsical this time around, Cimino said, pointing to sound-dampening ceiling tiles styled as an homage to Karl the Fog and a sixth-floor dining area with a Painted Ladies motif. In the Ignition Center's "Living Lab" workspace, the floor is made of rubber recycled from end-of-life Nike shoes.

"We didn't want to do the same concrete and carpet," Cimino said. "It was about getting people in a state of mind of thinking differently and creating more changes for them to run into each other again."