San Francisco’s economy may, at long last, be taking a turn for the better, according to the city’s controller. 

A new report published Friday suggests that the city has reached an “inflection point.” By several indicators, the city’s economic vitality is improving: Information sector jobs are up, as are hotel revenues and public transit ridership levels. Meanwhile, unemployment and office vacancies are down.

The report comes as San Francisco is experiencing its weirdest tech boom, according to the city’s chief economist, Ted Egan, who co-wrote the report and spoke with Mission Local about the issue last month.

The AI industry is attracting huge investment to the city and its tech workforce: Some $57 billion in venture capital investment went to companies in San Francisco in 2025, according to the Silicon Valley Institute for Regional Studies. But at the same time, the widespread adoption of AI is prompting mass layoffs, primarily in the tech sector.

Despite those layoffs, the city’s unemployment rate sat at just under four percent in February, its lowest level in eight months. 

“Job listings have recently trended positive in San Francisco and other tech hubs, and the city’s unemployment rate also has dipped in 2026,” the controller’s office wrote. “If this is a durable sign of a bottoming in tech hiring, that would be broadly positive for the city’s economy going forward.”

But the AI boom has another consequence: New highly paid workers coming to the city are causing rents to skyrocket.

This, the city says, is a good thing — economically. In at least three other reports from the last year, the controller’s office has characterized this rent growth as a “bright spot.” Higher rents are needed to push profit margins up and incentivize developers to build more housing, pro-housing groups say.

But that’s bad news for tenants, who make up close to two thirds of San Francisco’s residents.

Over a third of San Francisco households are rent-burdened, meaning they spend more than a 30 percent of their income on rent. Eviction notices, while lower than historic trends, have continued to rise. 

As of last month, the average asking price for a one bedroom apartment in San Francisco was $3,356, up from $3,117 in December, an increase of over seven percent in four months, according to data from Apartment List. 

San Francisco is the metro area with the second-fastest rent growth over the past year, behind only Virginia Beach, according to Apartment List  — especially striking for a market that was already among the most expensive in the country.

Likewise, asking prices for single family homes are up, outpacing growth seen at the state level. In April, the average price was just over $1.5 million, up six percent from last year, according to data from Zillow, the real estate platform.

Overall, tourism and hospitality services, which include restaurants, saw the most job growth in the city in the last year, with about 5,000 jobs added in that sector. Private education and health services also saw a bump in jobs added. Jobs in construction and the information sector, which includes tech, saw more modest growth. 

“Our economy is coming back, but we are not out of the woods,” said Mayor Daniel Lurie, in a statement. “Our recovery is still fragile, and we still have a significant structural budget deficit exacerbated by federal and state cuts, driving our budget gap to $1 billion in the coming years.”

Many of the metrics outlined in the controller’s report are a sign of improvement to San Francisco’s downtown. Namely office vacancy rates, which thanks to “strong AI activity,” fell to about 33 percent. 

Another milestone: Hotel revenues matched 2019 levels in the last quarter. Hotel occupancy rates, while not higher than 2019 levels, continue to recover.

Downtown BART ridership hit a post-pandemic high, as did Muni metro ridership, although the levels recorded for both remain lower than pre-pandemic levels, in particular for BART.