San Francisco’s economy may, at long last, be taking a turn for the better, according to the city’s controller.
A new report published Friday suggests that the city has reached an “inflection point.” By several indicators, the city’s economic vitality is improving: Information sector jobs are up, as are hotel revenues and public transit ridership levels. Meanwhile, unemployment and office vacancies are down.
The report comes as San Francisco is experiencing its weirdest tech boom, according to the city’s chief economist, Ted Egan, who co-wrote the report and spoke with Mission Local about the issue last month.
The AI industry is attracting huge investment to the city and its tech workforce: Some $57 billion in venture capital investment went to companies in San Francisco in 2025, according to the Silicon Valley Institute for Regional Studies. But at the same time, the widespread adoption of AI is prompting mass layoffs, primarily in the tech sector.
Despite those layoffs, the city’s unemployment rate sat at just under four percent in February, its lowest level in eight months.
“Job listings have recently trended positive in San Francisco and other tech hubs, and the city’s unemployment rate also has dipped in 2026,” the controller’s office wrote. “If this is a durable sign of a bottoming in tech hiring, that would be broadly positive for the city’s economy going forward.”
But the AI boom has another consequence: New highly paid workers coming to the city are causing rents to skyrocket.
This, the city says, is a good thing — economically. In at least three other reports from the last year, the controller’s office has characterized this rent growth as a “bright spot.” Higher rents are needed to push profit margins up and incentivize developers to build more housing, pro-housing groups say.
But that’s bad news for tenants, who make up close to two thirds of San Francisco’s residents.
Over a third of San Francisco households are rent-burdened, meaning they spend more than a 30 percent of their income on rent. Eviction notices, while lower than historic trends, have continued to rise.
As of last month, the average asking price for a one bedroom apartment in San Francisco was $3,356, up from $3,117 in December, an increase of over seven percent in four months, according to data from Apartment List.
San Francisco is the metro area with the second-fastest rent growth over the past year, behind only Virginia Beach, according to Apartment List — especially striking for a market that was already among the most expensive in the country.
Likewise, asking prices for single family homes are up, outpacing growth seen at the state level. In April, the average price was just over $1.5 million, up six percent from last year, according to data from Zillow, the real estate platform.
Overall, tourism and hospitality services, which include restaurants, saw the most job growth in the city in the last year, with about 5,000 jobs added in that sector. Private education and health services also saw a bump in jobs added. Jobs in construction and the information sector, which includes tech, saw more modest growth.
“Our economy is coming back, but we are not out of the woods,” said Mayor Daniel Lurie, in a statement. “Our recovery is still fragile, and we still have a significant structural budget deficit exacerbated by federal and state cuts, driving our budget gap to $1 billion in the coming years.”
Many of the metrics outlined in the controller’s report are a sign of improvement to San Francisco’s downtown. Namely office vacancy rates, which thanks to “strong AI activity,” fell to about 33 percent.
Another milestone: Hotel revenues matched 2019 levels in the last quarter. Hotel occupancy rates, while not higher than 2019 levels, continue to recover.
Downtown BART ridership hit a post-pandemic high, as did Muni metro ridership, although the levels recorded for both remain lower than pre-pandemic levels, in particular for BART.
“The economy” was only ever a proxy for human welfare but in the current system where billionaire psychos hoard almost all the gains from growth in “the economy” maybe it’s time for some new vocabulary.
“Higher rents are needed to push profit margins up and incentivize developers to build more housing, pro-housing groups say.”
THIS IS THE YIMBY PLAYBOOK. They lied to us the entire time.
Feels like a lot of “backward looking” data from our government. Perhaps the City data is what a “boom” cycle looks like as it peaks. Your calling an “inflection point” a good thing might be very very wrong.
In today’s SF Chronicle : “The tech job market is a bloodbath. It’s likely going to get even worse…… the tech world has been hemorrhaging skilled workers at major companies like Meta, Salesforce and Oracle,”.
If it’s a boom ending the City funding is going to dry up – both tax revenue and spending.
“But that’s bad news for tenants, who make up close to two thirds of San Francisco’s residents”
When the economy is “good” for tech and office real estate, life sucks for 2/3 of San Francisco. We need to re-evaluate what a “good economy” is and gear it more towards the needs of working class ppl.
this headline is bullshit
renters are part of “the economy” and you’re suckers for falling for the stiey that they aren’t
a correct headline would make it clear that rising prices are hurting some and no issue for itinerant tourists whike harming residents
this article is written in such a way that tech and AI are doing good. who on earth can afford these prices? i’ve lived here for 18 years and enough with this madness. when did we, the residents, decide that tech is the direction? I don’t remember getting to vote. and $3300 for a 1br is ridiculous. THAT’s the article you should be writing.
Just because the tech industry’s boom and bust cycle has devastated San Francisco’s economy three times doesn’t mean it will happen again. Thank you Mayor Lurie, for our city’s fast-rising rents!
This is kind of burying the lede, as we used to say in J-school. San Francisco embracing even greater wealth inequality and skyrocketing increases in already insane rents,all in the service of a tech boom that like all the others will soon crash is not good news at all… especially combined with the upcoming defeat of Prop D and victory of Prop C, which will result in more budget cuts and shifting more of the tax burden onto the people least able to pay. Big picture, people.
What’s the prediction on how long this lasts? Hopefully enough for us all to recoup our losses in the pandemic which is one of the reasons things ‘look high’ but in reality rents were much higher before the pandemic. Shoot, we still have 33% vacancies in office buildings.
Exciting times. Maybe, just maybe we can embrace AI in our work and it’s won’t be all doomsday, it might be like everyone switching from typewriters to computers with the internet….
Ever heard of the Google? San Francisco rents are higher now than they were before the pandemic and are about to get much higher.
I keep wondering how long the YIMBY movement’s core claim, “We need to build more housing to make rent affordable,” can continue to be taken seriously now that actual economists and developers keep admitting, “We need rent to get less affordable so we can build housing.”
The way out is clearly public investment in permanently affordable social housing. It doesn’t need to make the same returns because it’s housing as infrastructure for common good, not profit. But most of our YIMBY-endorsed politicians are lining up to repeal what was supposed to be our funding source to get that started (the Prop I transfer tax).