AI Boom Causes Rents to Skyrocket in San Francisco

As artificial intelligence’s foothold grows in San Francisco, so too do rent prices.

AI startup Cluely, for example, is playing a part in the rent increase, the New York Times reported.

After landing $5.3 million in seed funding this spring, its 22-year-old founder Roy Lee inked leases for eight high-end apartments in San Francisco’s South of Market neighborhood, steps from the company’s office.

Units in the 16-story building fetch anywhere between $3,000 to $12,000 a month and come with concierge and cleaning services.

Apartment prices in San Francisco have climbed an average of 6 percent over the past year, more than double the 2.5 percent increase in New York City, according to CoStar data cited by the outlet.

Average rent for a San Francisco apartment is now $3,315 a month, just a few dollars behind the nation’s highest, in New York City, at $3,360. In hot spots like Mission Bay, near OpenAI’s headquarters, rents climbed 13 percent recently.

“Honestly, I’ve never seen anything like it before,” said Will Goodman, a principal at Strada Investment Group, which developed the luxury complex where Cluely leased. Half of the 501-unit complex’s units were leased within two months of its May opening, he told the outlet.

Lines are forming around the block for apartment showings, with some renters flashing cash deposits on the spot. Last month, rent prices in the city surpassed pre-pandemic highs.

For service workers and younger professionals, the crush is pushing affordability out of reach.

Renters like Caroline Roche, a 25-year-old demand planner at Backroads, toured 25 apartments in a week to find a one-bedroom within her budget. Others have resorted to guerrilla tactics, such as posting flyers with their photos and phone numbers on telephone poles, to land a lease.

It’s not just renters who are feeling the pinch of high demand and high prices.

Buyers looking for luxury homes in San Francisco are having a harder time than ever to find mansions, as sales for those pricey abodes are up 14 percent year-over-year, while inventory is down 4.5 percent year-over-year.

— Chris Malone Méndez