With the shelter-in-place order of the COVID-19 pandemic, many San Francisco tech workers left their offices for newly adapted hybrid-working policies. This change left the city streets deserted with blocks of available office units vacant.
However, with the recent sweeping technology wave, many AI startups and tech titans have established themselves in neighborhoods across the city, including one of the most culturally diverse and historical neighborhoods, the Mission District.
Developing into one of the major AI capitals of the world, the Mission has attracted numerous AI companies including Pano AI, MindsDB, Adept AI and the most influential of all, Open AI – the developers of ChatGPT.
Still, many are left asking what makes the Mission the ideal place for AI companies? Ultimately, it comes down to funding, local talent and opportunity.
Data supports that with the growth of AI in the city, neighborhoods like the Mission have a lower vacancy rate for office leasing compared to downtown which has led to a surge in the value of the Mission’s commercial and housing market.
OpenAI, a leader in the AI industry, leased two offices in the Mission District in 2020 and 2022: 40,000 square feet at 3180 18th St. and another 100,000 square feet at 575 Florida St. As a result, several articles and journalists credit Open AI for igniting another tech movement in the city, more specifically in the Mission District, where many AI startups have begun to establish themselves.
photo courtesy of public domain
According to a Business Insider article, data collected from VTS – a software real estate data company – indicates the influence of the AI industry in San Francisco has recently caused about a 10% surge in office space demand in the city since the end of the pandemic.
Data amassed from the fourth quarter report by JLL, a global real estate management service, shows that there has been an increase of tenant interest in the Mission.
With a myriad of AI companies establishing themselves in the Mission, many predict a future surge in rent prices in the neighborhood. As a result, some people are afraid local small businesses and longtime residents will be displaced.
Presented by DataSF, 2,993 eviction notices in the Mission District alone have been reported since 2020. Furthermore, the San Francisco Standard’s article “Visualizing Eviction: See Where San Francisco Evictions are Edging Upwards” presents data supporting that the Mission District has consistently had the highest eviction rate out of all SF neighborhoods. Over a four-year period, 347 eviction incidents have occurred in the Mission.
In the city and in the Mission, rent has increased for units under rent control by 0.7%, 2.3% and 3.6%, respectively, in the past three years. Furthermore, it is expected to increase by 1.7% in the upcoming year.
President of the Mission Merchants Association, Ryen Motzek, is open to the idea of AI companies establishing themselves in the Mission. “I hope these AI companies are community minded. I hope that they will try and support the community. In the past, tech companies have kept to themselves. Rather than supporting the local community, they have displaced local businesses. I hope this won’t happen again,” Motzek said.
photo courtesy of public domain
Some local business owners such as Juan Gallardo, founder of Gallardos Mexican Restaurant which is located a block away from OpenAI., feel that AI companies moving to the Mission are changing the local community. “A lot has changed in the Mission. Before the pandemic, a lot of businesses were moving, and the neighborhood was empty. Now, you see an increase in foot traffic which benefits many local businesses. These tech companies have not only brought more customers to my restaurant, but they have brought more movement to the neighborhood,” Gallardo said.
However, not everyone is convinced about the possible variety of effects of AI companies in the Mission.
John Gjoni, owner of La Traviata, one of the oldest restaurants in the Mission District, expressed his uncertainty about the future of the Mission. “It’s important to realize that potential can be exploited for both good and bad,” he said. “Although, I believe it is too soon to judge what the effects will be of AI companies establishing themselves in the Mission, time will tell. Even though we are a small business, we hope to adapt to these companies, making use of the foot traffic in the neighborhood and the increasing value of the Mission” he said.
Ultimately, people have varying opinions on whether AI companies are a source of good or bad for the Mission District.
“This is life-changing technology,” Gjoni said. “And it will continue to change our lives in ways we cannot even imagine.”
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