Based on a recent report, San Francisco’s tech sector is experiencing a resurgence primarily attributable to a thriving artificial intelligence (AI) industry. San Francisco and its neighboring county, San Mateo, added 2,800 new tech roles in May, according to the city’s most recent employment data.
Since a surge of industry layoffs began in late 2022, San Francisco’s chief economist Ted Egan states that this development represents a 38% job recovery. “The stock market, especially the Big Tech sector, is performing exceptionally well this year, which frequently precedes hiring trends in San Francisco,” Egan noted. Given the attention it is receiving, he hypothesized that the burgeoning artificial intelligence industry played a significant role in this employment expansion.
San Francisco is home to companies such as OpenAI, the creators of ChatGPT, and Anthropic, which recently obtained a massive $450 million investment for an AI chatbot. The data does not specify the precise distribution of these new jobs between San Francisco and San Mateo County, even though these indicators point to AI-driven employment growth.
Given the city’s ongoing challenge with one of the nation’s most severe pandemic-era recoveries, Egan welcomed this news. During the pandemic, tech titans such as Salesforce, Alphabet, and Meta engaged in extensive hiring, only to pull back in 2022 in response to rising interest rates. Since then, many businesses have abandoned their office spaces, mirroring the flight of retailers from San Francisco’s downtown.
Egan clarified, however, that the expansion of the tech industry may not inherently stimulate office occupancy as the work-from-home trend gains ground among tech workers. According to CBRE Group data, the city’s office vacancy rate reached an all-time peak of nearly 32% in the second quarter. “This is a separate challenge for downtown,” said Egan. Consequently, while San Francisco’s tech sector is experiencing a resurgence, the downtown area continues to confront the formidable challenge of vacant office spaces.