For the past few years, San Francisco has served as the poster child of urban decline. From a 7% population drop to headlines about office vacancies and public safety, the narrative has been clear: the city was in freefall. But like many great cities before it, San Francisco is showing signs of something it hasn’t had in a while—momentum.

New data from the Brookings Institution confirms what many of us in real estate have been watching closely: the outflow of residents has dramatically slowed. From a staggering loss of over 57,000 people during the peak of the pandemic, outmigration has now dropped by more than 90%. In 2024, San Francisco posted its first year of population growth since 2019, driven almost entirely by international migration.

But this isn’t just a demographic reversal. It’s an economic one.

San Francisco has quietly re-established itself as the global epicenter for generative AI. According to Cushman & Wakefield, there are now 466 generative AI companies based in the city, and the energy in the startup ecosystem is palpable. Thousands of engineers, product leaders, and entrepreneurs are arriving from abroad, chasing both equity upside and proximity to the next frontier of tech.

That influx is creating renewed pressure on housing—and finally pushing the city’s leadership to respond in kind.

Enter: Daniel Lurie’s Housing Plan

San Francisco’s new mayor, Daniel Lurie, has rolled out a comprehensive rezoning proposal aimed at transforming vast swaths of the city that have seen little or no development in decades. He’s calling it “family zoning,” and it includes everything from 65-foot buildings along east-west corridors in the Richmond and Sunset, to potential 350-foot towers on Van Ness.

The plan could unlock as many as 36,000 new housing units, directly aligned with the city’s state-mandated housing production targets. It’s bold. It’s overdue. And it’s going to be controversial.

Predictably, opposition is coming from longtime homeowners who are framing the rezoning as a threat to neighborhood character. But what’s new is the groundswell of support from younger renters and working families who want a path to remain in the city. That generational shift in the housing conversation is a sign of how much things are changing on the ground.

What Developers and Investors Should Be Watching

From a development standpoint, San Francisco is about to enter a new era. After years of political paralysis and anti-growth rhetoric, the city is acknowledging what many of us have been saying for years: you can’t be a global innovation hub without building for the people driving that innovation.

There’s an opportunity here to think beyond the traditional luxury midrise. The demographic fueling this rebound isn’t necessarily looking for large floor plans or valet parking. They want community, walkability, flexibility, and a connection to something larger than themselves.

That’s where co-living is stepping back into the picture.

The Return of Co-Living—This Time With a Tailwind

During the pandemic, co-living got crushed. What was once a growing category of “tech dorms” with 100-square-foot rooms and shared kitchens fell off a cliff. But the model is returning with a new level of maturity, better operators, and a global mindset.

International players like Neighbourgood (South Africa), Enso Co-Living (Barcelona), and Urbanest (San Francisco) are all scaling aggressively. Neighbourgood alone is targeting 1,000 rooms within the next 24 to 38 months and plans to hit 2,500 rooms within five years. These groups are not just targeting the lowest-cost renters—they’re designing community-focused urban housing for the international workforce that’s flooding into the AI sector.

This time, the demand is real. The target audience is here. And the city may finally be willing to get out of its own way.

Where the Opportunity Lies

For investors, the window is opening. There is a narrow but significant arbitrage opportunity in being first to entitle or reposition properties in rezoned corridors. Assets along California, Geary, Taraval, or Van Ness that may have languished for years could now be prime candidates for vertical expansion, co-living conversions, or mixed-use integration.

We’re not just talking about traditional multifamily. We’re looking at:

• Mid-density co-living with high turnover and global tenancy

• Adaptive reuse plays around BART and MUNI hubs

• Projects that blend short-stay with long-term communal housing

Entitled land and soft sites in targeted rezoning zones will see a repricing the moment this plan gets political traction. The opportunity is not speculative—it’s zoning-backed and demographic-led.

This is the kind of alignment between policy, migration, and capital that San Francisco has not seen in a generation. If you’re still looking at the city through the lens of 2021 headlines, you’re going to miss the next cycle.

Let’s not sleep on this.