San Francisco's 'Doom Loop' Declared Over by Commentators
Multiple commentators are signaling a revival in San Francisco, suggesting the city's post-pandemic "Doom Loop" is over. The reversal is reportedly driven by the AI boom, with firms like Anthropic and OpenAI leasing significant office space. Others celebrated the commitment of companies like YC, OpenAI, and TaskRabbit to maintain headquarters in the city.
The AI sector's appetite for office space is projected to be substantial, with one forecast suggesting these companies could lease up to 16 million square feet by 2030. This new wave of leasing is a significant factor in the city's recovery, with AI firms accounting for a quarter of all office space leased in 2025 and over 80% of newly leased space. This surge in demand has already made a noticeable impact on the city's commercial real estate market. San Francisco's office vacancy rate saw a 3.7% decline over the past year, the most significant annual drop since 2011. In the third quarter of 2025 alone, tenants absorbed approximately 1 million square feet of office space, marking the fifth quarter in a row of positive net absorption. The nature of this new demand differs from previous tech booms. Today's tenants, including established names like Nvidia and startups like Sierra AI, are often seeking smaller, high-quality spaces that are move-in ready. This contrasts with the massive, single-tenant towers leased during the 2010s. Beyond the tech sector, other vital signs for the city's economy are showing improvement. The tourism industry, for example, welcomed around 23 million visitors in 2024, who spent an estimated $9.26 billion. Projections for 2025 anticipate a modest increase in both visitor numbers and spending. The city's hotel industry is also experiencing a rebound. In the first seven months of 2025, the revenue per available room (RevPAR) in the San Francisco/San Mateo market grew by 8.8%, the fastest rate among the top 25 U.S. markets. Hotel occupancy is projected to reach 64.4% in 2025, a 2.3% increase from the previous year. Local government initiatives are also contributing to the positive trend. Mayor London Breed's office has directed over $115 million in grants and loans to nearly 7,000 small businesses since the pandemic began. Programs like the Storefront Opportunity Grant and the Vacant to Vibrant initiative are actively working to fill empty commercial spaces. This recovery is also reflected in the small business landscape. In 2024, twelve new ground-floor businesses opened in the downtown area, with more following in 2025. This includes the return of beloved local establishments like Turtle Tower, a Northern Vietnamese restaurant, to the Financial District. While challenges remain, the combination of a booming AI sector, a recovering tourism industry, and supportive local policies has created a strong sense of momentum. Companies that had previously left the city, such as Brex and Coinbase, have even signed new leases to return.
