· Kaufman Development
Remember When “Everyone” Said San Francisco Was Over?
Twelve months ago, cocktail-party consensus wrote the Bay Area’s obituary. A “doom loop,” empty towers, tech talent sprinting for Austin or Miami—so why on earth, they asked, was Kaufman Development accumulating sites and structuring JV capital in the city by the Bay?
Because market cycles don’t die; they reset. And the deeper the pessimism, the better the entry price.
Today, even the skeptics have to concede the scoreboard:
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Luxury apartments are sparking bidding wars. Compass agent Inna Rubinchik says every north-side listing this year has leased above ask—and she just repriced a Pacific Heights single-family 30 percent higher than its 2022 rent.
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Downtown high-rises are back in demand. A two-bedroom at the MIRA tower near the Embarcadero listed for $5,695/month in April and was bid over $6,000.
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Median luxury rents are up 9.7% year-over-year (Zumper), while one- and two-bedroom units citywide have jumped 11.9% and 14.2%, respectively.
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Millionaire renter households in SF have quadrupled since 2019—now second only to New York (Yardi).
In other words, the “ghost town” narrative just met cold, hard pricing power.
Why the Turnaround Accelerated Faster Than the Headlines
Driver
What’s Happening on the Ground
AI Super-Cycle
Firms like OpenAI, Anthropic, and a swarm of early-stage startups are scaling HQ footprints downtown. Executive relocations follow.
Return-to-Office Mandates
Big Tech is quietly tightening occupancy requirements—pushing talent back into urban neighborhoods with walk-to-work convenience.
Rent vs. Own Math
A $10K lease pencils at ~$17K to own the same house after PITI. High earners are choosing flexibility.
Supply Starvation
Developers sat out 2020–2023. Little new product is coming online just as demand spikes.
Quality Gap
Tenants at the top end want “modern, new, sexy, outdoor space.” When a unit checks those boxes, competition is ferocious.
Put simply, the city never lost its talent magnetism—it just paused while cost of capital reset.
How We Positioned Ahead of the Curve
At Kaufman Development, we’ve been executing in San Francisco while the headlines screamed “flee.” Here’s what that’s looked like:
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Infill Assemblages in Pacific Heights and the East Cut that can deliver condo-spec finish in rental format
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Value-Add Towers south of Market with CapEx plans focused on concierge-level amenities (gym, pool, hot tub)
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Convertible Commercial Assets in prime locations where office-to-resi makes sense with the right capital stack
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Structured Equity & Rescue Capital placed into stalled but fundamentally sound projects with long-term upside
We heard “crazy.” We translated it as “early.”
Who’s Crazy Now?
The same voices that dismissed San Francisco are now recalculating underwriting at today’s higher rents and tighter cap rates. Meanwhile, our basis is locked, entitlements are progressing, and family office co-investor interest is ramping fast.
“If you want to maximize rent, make it sexy… You’re not going to have any competition whatsoever.”
— Inna Rubinchik, Compass Leasing Agent
That’s exactly the playbook we’ve been executing—and the latest leasing data proves the strategy is working.
What Comes Next (and How You Can Participate)
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Lease-Up Velocity will continue climbing through 2026 as AI hiring and RTO mandates converge
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Condo Arbitrage will attract current renters to buy once rates moderate
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New Supply Gap ensures that projects starting in the next 12 months will deliver into a tight market
If you’re an investor who values data over drama and strategy over speculation, let’s talk. Learn more about our current offerings and thesis at:
We bought the fear. Now we’re leasing the comeback.
Still think we’re crazy?
SOURCE:
“San Francisco luxury apartments being bid up by renters,” by Emily Landes, The Real Deal – June 17, 2025
© 2025 Kaufman Development. All rights reserved. Opinions are my own and should not be construed as investment advice.