Co-Living Biz Bounces Back With AI Boom in SF

An artificial intelligence gold rush in San Francisco is being propped up by 100-square-foot rooms barely big enough to squeeze in a bed.

Young people flocking to join the city’s AI bonanza are renting “tech dorms,” or coworking rooms available for $1,000 a month, the San Francisco Chronicle reported.

UrbaNests, a locally based co-living landlord, now operates tech dorms at 221 7th Street, 1080 Folsom Street and 1412 Market Street in South of Market, where mostly foreign-born engineers share meals, ideas and an AI mindset.

Why spend $2,200 a month for a room in an apartment when you can rent a dorm room for $1,000? asked Param Vora. His 100-square-foot pad has a sink, mini-fridge and a shared kitchen and bathroom, not unlike a single-room occupancy hotel room.

“If you are a single person like me you are focused mainly on building your company,” said Vora. “There are so many founders living in these buildings — we all share this mindset of building AI technology to solve large-scale problems.”

The co-living industry, which fizzled in San Francisco during the pandemic, has rebounded — fueled by young entrepreneurs flooding into town to join the AI boom, according to the Chronicle.

International co-living firms are taking advantage of San Francisco’s weak pandemic recovery to buy or lease buildings on the cheap.

South Africa-based Neighbourgood has opened three co-living buildings with 53 rooms — one in the North of the Panhandle and two in the Mission, according to the Chronicle.

It’s also in escrow to buy a 12-room historic guest house at 1409 Sutter Street, between Gough and Franklin streets. Neighbourgood CEO Murray Clark says it has big plans for San Francisco: cafes, co-working spots and a high concentration of apartments and rooms.

“We want to get to 1,000 in the next 24 to 36 months and 2,500 in the next five to seven years,” he told the Chronicle. “We are seeing deals that we are not seeing anywhere else because of the pressure San Francisco has been under. In my mind there are too many smart people in San Francisco for it not to improve. It’s too cool a city.”

Barcelona-based Enso Co-Living, which runs 690 rooms in Spain and Mexico, aims to set up shop with co-living locations in San Francisco this year, according to Pablo Gomez, the company vice president of expansion and growth.

“San Francisco is a top city we are looking at expanding to,” he told the newspaper. “You have a lot of ex-pats, you have Silicon Valley, you have a lot of people who need flexibility because they are moving all around the place.”

The co-living business, hammered by the pandemic, hurt prominent companies.

Locally based Starcity was facing bankruptcy when it was acquired by Common in 2021. Common, based in New York, filed for Chapter 7 bankruptcy last year after once operating a U.S. portfolio of 5,200 units in 12 cities. HubHaus, which turned single-family homes into co-living communities, also went belly up.

UrbaNests, which leases and owns co-living buildings, had to downsize in order to survive. Occupancy went from nearly 100 percent to 70 percent vacant.

While rents are still down 25 percent from 2019, and the number of rooms Urbanest runs has dropped to 440 from about 1,000, executives say its portfolio is now “stabilized” to 85 percent occupancy.

Tony Brettkelly, its CEO, just took over the empty Inn at Market tourist hotel at 1412 Market Street, which he’s now converting to an AI-specific “hacker house.” He’s also scouring the city for other buildings to buy or lease.

“These kids are not looking for luxury,” he told the Chronicle. “They want things to be really functional and be stimulated by the people around them. That is what we are trying to achieve.”

— Dana Bartholomew