Never Mind the IPOs—Rent's Falling

Money is washing through the tech sector, but some of its workers have left San Francisco

- Sophie Alexander, with Patrick Clark and Noah Buhayar

Tech stocks are soaring, and high-profile initial public offerings are set to mint millionaires. Yet in San Francisco, the boom times are over. The resurgent coronavirus has thrust the tech hub back into lockdown. Offices sit empty as working from home becomes the norm. While the stock market debuts of hometown companies Airbnb Inc. and DoorDash Inc. would typically have the city girding for a flood of wealth, many workers have already fled for the suburbs, Lake Tahoe, or beyond.

Nowhere are the effects more pronounced than in the real estate market, where apartment rents are plunging further than anywhere else in the country. The median rent for a studio apartment dropped 35% last month from a year before, to $2,100, while the cost of a one-bedroom fell 27%, to $2,716, according to data from Realtor.com. The declines are steepening from earlier in the pandemic—a sign that people with the flexibility to move are leaving an area that’s still one of America’s priciest for housing.

San Francisco stands to be one of the U.S. cities most affected by the trends brought on by Covid-19, even as much of the industry that drives its wealth thrives. While many New York finance firms are pushing for a return to the office, tech companies are more fully embracing remote work, raising the prospect of a longer-term transformation.

Technology companies “have been among the most flexible with allowing people to work remotely, and a lot of workers are taking advantage of that,” says Danielle Hale, Realtor.com’s chief economist. She expects San Francisco’s apartment rents to recover eventually, depending on how quickly people return to the office.