SF Renters Face Buyout Offers and Evictions as AI Boom Sends Prices Soaring

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Alexis Madrigal (1:04)

Welcome to Forum. I'm Alexis Madrigal.

Stop me if you've heard this one before. Rents are going up in San Francisco. Just a quick history of the subject. In San Francisco, rents have been going up for a long time, with some major exceptions, the bus that have followed various tech booms. Of course, it was the pandemic that actually sent rents down, actually down for a time.

But they bounced back, and now they are exceeding the absolute and inflation-adjusted numbers of recent history. We're going to explore the dynamics of the rental market this morning. What's the same as always? What might be different this time around? And we're going to hear your stories of woe and triumph, although mostly woe, I'm guessing. Joining us first to set the stage, we've got JK. Dineen, Bay Area housing reporter with the SF Chronicle, of course. Welcome, JK.

J.K. Dineen (1:54)

Thanks for having me.

Alexis Madrigal (1:56)

Give us some numbers, just like put some meat on the bones here. How much have rents actually gone up? It seems extreme over the last year.

J.K. Dineen (2:06)

So rents are up 26 percent year over year, about 42 percent in the last five years. It's very uneven. There are some parts of the city that where rents are up closer to 40 percent. And there's places that they never really went down that much. Like neighborhoods like the Sunset and the Richmond and Noe Valley. And that sort of became magnets during COVID, where people were escaping downtown and no longer needed to be at the office.

And so, yeah, now you've got $4,000 for a one-bedroom.

You've got, you know, $5,500, $6,000 for two bedrooms. It's just ridiculous. You would have to make $150,000 to afford a one-bedroom. I mean, a sous chef in San Francisco makes $80,000. A teacher makes $80,000 with fully credentialed K-12 teacher. And so it's just the numbers are frightening, frightening, yeah.

Alexis Madrigal (3:12)

I mean, you've been around a long time. You've been reporting on this stuff for a long time. How do you compare the sort of current frenzy to previous times, like, you know, right before the pandemic, for example?

J.K. Dineen (3:23)

I think it's been faster. And I also think it's been more skewed towards the upper end of the market.

I talked to a broker last week who said that he does both apartments and for sale, sort of focusing on the downtown neighborhoods, and he was saying that the now about 15% of these high-end apartments are the tenets are offering to pay a full year in advance. He had one tenant at one of the Rincon Hill Towers, the towers right at the base of the Bay Bridge. I think it was on the top floor, the second highest floor. The landlord was asking 21,000, and the tenant paid a full year. So with first and last and security, the tenant put down over $250,000 for an apartment for a year.

Alexis Madrigal (4:17)

I mean, I guess I want to ask, is it the AI companies? Is that really what it is? That if you're an AI person, you want to be in this city, you're willing to pay whatever it takes to be here?

J.K. Dineen (4:29)

I think that's right. I also think that the nature of work has changed, people want more space. So before the pandemic, there was a real move towards small units.

And tighter workspaces, too, just in terms of offices, and people were averaging, tech companies were averaging 100 square foot per worker, and people were building studios, the new construction, largely 600 square foot, 500 square foot studios. And now it's sort of the opposite. The AI companies are averaging closer to 200 square feet per employee, and people want space. They want to work from home, they want all the bells and whistles and gyms and yoga rooms and all that too. But yeah, so there's just been a real shift.