While the cost of capital has climbed, back to an average rate, the weighted average asking rent for an apartment in San Francisco proper has now held firm at roughly $3,600 a month for the eighth month in a row.
At the same time, the number of apartments listed for rent in San Francisco continues to climb and is now 30 percent higher than at the same time last year and at a two-year high, with over 40 percent more studios and one-bedrooms on the market and local employment down, key facts that aren’t “bearish” or “pessimistic” in nature but simply reality and shouldn’t catch any plugged-in readers by surprise.
While local landlords have been trying to hold firm on rents and returns, with the average asking rent in San Francisco only 2 percent lower than at the same time last year, the average asking rent in San Francisco remains 12 percent lower than prior to the pandemic and 19 percent below its 2015-era peak of nearly $4,500 a month, with the average asking rent for a one-bedroom in San Francisco having slipped back under $3,000 per month, which is 15 percent lower than prior to the pandemic and 19 percent below peak. And once again, inventory levels are climbing.
Keep in mind that our analysis of the rental market in San Francisco is based on over 170,000 data points going back to 2004 that we maintain, normalize and index on a monthly basis, not simply a few years of data or agents’ recollections. We’ll keep you posted and plugged-in.
The frenzy surrounding a type of software designed to disemploy white collar workers will no doubt lead to a new boom in demand for and from white collar workers that will surpass the corresponding decline in demand for and from white collar workers. Further, this Ponziesque spectacle of the snake swallowing itself could lead to a boom in local disaster tourism, so there’s a bonus.
This post is a product of AI, correct? To the developers, I recommend extrapolating the natural language dictionaries as there is obvious redundancy in this bot’s output.
If San Francisco truly becomes the hub for AI companies, as it appears is happening, SF will at least get the small bump in wealth creation on that front from the 20-something coder kiddies you despise who work for OpenAI. I’d be far more worried about NYC, Chicago and international customer service hubs like Manila.
I think NYC may make it: after all, they made it thru the draft riots, 9-11 and 300+ years of mail being misdirected to NieuAmsterdam (with postage due!). Manila, OTOH, I’d be worried about – not Oakland level worried, mind you, but still worried – what have they really got
but royalties on envelope sales??They don’t ?? Gee, they really are ****ed, aren’t they ??There were already so many machine learning companies, plus companies doing AI —in the end potato potato. The NEW thing may be a bit overemphasized as usual …
However, more layoffs do seem likely — if not soon then as soon as all the generative models percolate through industries.
Just in case you haven’t been following the news since Friday, the 20-something coder kiddies Panhandle Pro is referring to who work for OpenAI are looking increasingly likely to just become workaday employees for Microsoft in the near-future, as former CEO Sam Altman and former President Greg Brockman are as of this past Sunday night, and what would have been a blockbuster IPO for OpenAI might not result in a bang but a whimper of wealth creation, most of which will end up in the portfolios of existing MSFT shareholders.
Meanwhile, C3.ai is laying off workers in the Bay Area and reportedly plans to replace them with folks off shore, while framing the layoffs as “related to the performance of the individual workers rather than layoffs”.
OpenAI is at the center of the action and their employees will continue to do exceptionally well for some time to come. In contrast to conventional startups, said employees didn’t stand to directly gain from an exit like an IPO, because they weren’t given equity in the organization. OpenAI is not a traditional startup in that regard. To the outside world, there is not much direct impact when/if OpenAI’s workforce is absorbed by Microsoft, other than Microsoft perhaps keeping the lease in 555 California Street after all.
c3.ai look to me like part of a cottage industry trying to connect existing industries with emerging AI technology. The offshore element seems strong, but not a factor so long they can keep growing business. Trouble being, at this stage, AI in real world industries is not mature to produce consistent results. It is easy to work on a failing project that’s bleeding money. My guess – they’re going to shotgun projects hoping for a winner here and there, which is only sustainable if you push cost of each project down, including offshoring labor.
Well, for a different take on the potential impact of MS effectively absorbing OpenAI’s workforce. From How OpenAI drama could impact San Francisco’s real estate market:
The whole thing is worth reading, even as it includes a lot of speculation. If OpenAI gets folded into MS, one of her sources says that “is likely a “net negative” for San Francisco’s real estate market, as the software giant already has enough office space to accommodate them.
With nearly 26 million square feet of empty office space in San Francisco, “which is roughly enough space to accommodate between 148,000 AI or other full-time employees, based on an average, pre-Covid office density ratios, or up to 200,000 (a la Twitter/X or part-time) worker bees,” as we outlined last month, the “OpenAI drama” and its overplayed “real estate impact” is a drop in the bucket/blip.
they were definitely given equity and the mgmt was working on a way for them to cash out early on the 2ndary market with a new valuation. many people (well over 100) would have netted well over $10M each. thats dead now. i would expect investors to be suing the board soon. this was gross negligence
Maybe lay off the Hot Takes about OpenAI for a little while. Seems that he’s back already.
I don’t know what will happen. You don’t know. No one knows.
Thanks for that link brahma. SF chron has shut down ability to comment on their site recently, so SS could be only place to discuss now. Is Open AI going to be dumping big block of space on sublease market in SF?