Blame rising apartment rents across San Francisco on the artificial intelligence boom.
That’s the contention of AvalonBay Communities CEO Sean Breslin, who says return-to-office mandates bringing people back to San Francisco, better public safety and AI-dominated job growth have jacked up housing demand, the San Francisco Business Times reported, citing the company’s earnings call.
“AI is certainly a big part of that,” Breslin told investors of the upward pricing trend.
San Francisco still maintains lower rents than it did before the pandemic, down about 14 percent from a peak of $3,270 in July 2019. But that figure has been slowly climbing since late last year. One-bedrooms typically went for about $2,810 a month as of this February, marking a 5 percent increase from $2,670 a year before, the San Francisco Chronicle reported.
Virginia-based AvalonBay owns nearly 3,400 apartments in San Francisco, valued at $1.2 billion.
The real estate investment trust partially attributes the rise in rents to demand from a growing number of new AI employees flooding the city to take advantage of the AI boom.
But Ted Egan, chief economist for the city, isn’t so sure.
“Our apartment rents were beaten down badly, but over the past year, San Francisco’s rents are among the fastest growing in the U.S.,” Egan told the Business Times. “For now, we don’t have a lot of corroborating evidence why this is.”
Over the past two years, remote job listings in San Francisco have dropped 71 percent, according to the Business Times.
Meanwhile, AI companies such as OpenAI and Anthropic — known for preferring in-person work — occupied more than 5 million square feet of offices across the city. Last quarter, AI firms inked nearly 20 deals for offices, totalling more than 275,000 square feet.
AvalonBay isn’t the only landlord to notice people flocking back to the city. Equity Residential, owner of more than 11,300 apartments in San Francisco, reported 97 percent occupancy.
On top of increased demand, the city is weathering a sharp decrease in new housing supply, according to AvalonBay executives. Greater San Francisco is projected to see fewer than 700 new apartments completed by next year, marking a multidecade low and further strain on the market.
The rising costs of development due to tariffs also don’t help. By AvalonBay’s estimates, total project costs could jump 3 to 4 percent, throwing the fate of some new projects into jeopardy.
— Chris Malone Méndez
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