As residential real estate professionals, our job doesn’t stop at tracking home prices. The strength of our local housing market is deeply connected to broader economic and commercial trends. That’s why we’re paying close attention to the commercial space right now—because San Francisco is bouncing back faster than most people realize.
In this month’s market report, we’re diving into:
- Office leasing trends
- The AI boom’s impact on San Francisco
- Return-to-office momentum
- Multifamily housing investments
- Major institutional moves (Blackstone, PG&E, etc.)
Let’s break it down.
BY THE NUMBERS
AI & Tech Are Driving SF’s Revival
San Francisco is now the epicenter of the global AI movement, which is fueling a massive economic rebound:
- SF hosts more top-funded AI startups than any other city in the world. In fact, tech jobs in SF grew 37% in the past 5 years, rebounding faster than other metros post-COVID.
- SF is #1 for tech wage growth (33%) from 2017–2022.
- Harvey AI, a legal AI unicorn, leased nearly 93,000 sq. ft. at 201 3rd St.
- Blackstone & DivcoWest invested $111.3M in 300 Howard St this quarter.
- DRA Advisors & Flynn Properties dropped $177M at 555 & 575 Market St.
- Big companies like PG&E, LendingClub, and DRA Advisors made recent 9-figure bets on SF/Bay Area commercial assets.
Takeaway: Many of the smartest companies in the world are choosing SF for their AI operations—and they’re hiring, leasing, and investing accordingly.
Office Market: Signs of Stabilization & Absorption
San Francisco’s office sector is still working through historic vacancy levels, but there’s very clear momentum building, suggesting that this is the tipping point:
- Office was the most popular asset class in the Bay Area with $5.39 BILLION invested (followed by multi-family)
- Office vacancy in SF is at 34.8%, down slightly but still high, indicating long-term opportunity for investors.
- Net absorption is positive: 779,919 sq. ft. in Q2 alone—a strong indicator that tenants are returning
Notable lease deals this quarter:
- City of San Francisco: 225,800 sq. ft. at 1455 Market St
- LinkedIn: 154,450 sq. ft. at 222 2nd St
- Coinbase & Harvey AI also signed major new leases
These are not just any tenants—they’re market leaders in tech, AI, government, and finance, and they’re recommitting to SF and to being in office.
Multifamily is Heating Up Again
After a post-COVID cooldown, multifamily demand is surging across the Bay Area — with San Francisco leading the charge:
- San Francisco multifamily rent is up 5.4% YoY, outpacing national averages. (Keep in mind, all legacy rentals are capped at 1.4-2% YOY increase, meaning that this number is skewed and under-representing how much new rentals have surged.)
- Occupancy has climbed to 97% across the SF Peninsula, with vacancies shrinking to just 3%
- Over $1.3B in SF multifamily transactions have closed this year, including major properties like Olume Apartments and 1000 Green St
- Absorptions are outpacing new supply 4-to-1 in SF — driving tightness and competition for well-located units
Why This Matters for Residential Real Estate
When major employers commit to San Francisco, it stabilizes jobs, drives wage growth, and pulls more people into the city. We’re already seeing:
- Rental demand surging, which often precedes resale market movement.
- A growing cohort of buyers with tech and startup liquidity.
- Increased investor activity in 2-4 unit and condo buildings, especially in high-density corridors.
Residential doesn’t exist in a vacuum. The commercial ecosystem—jobs, offices, investment confidence—is what fuels long-term housing strength. And, right now, they’re hot! 🔥
FINAL THOUGHTS
It seems that San Francisco is no longer in recovery mode. It’s in rebuild and rebound mode—and the smart money knows it.
If you’ve been waiting for a sign that SF is back, this is it!
Want to talk about where the residential market goes next? Let’s chat. The macro data, investor flows, and leasing activity all point in one direction: momentum 😀
OUR COLLECTIVE WINS
1BD | 1BA | $1,225,000
Marina, SF
In just a week on the market, we generated multiple offers and sold for 15% over list price on this amazing property blowing past the seller’s expectations. Huge congratulations to our wonderful clients!
2BD | 2BA | 1398SF | $1,905,000
Cow Hollow, SF
After beating out multiple offers, our clients are officially moving back to the Bay 🌉 Nothing better than helping someone come home.