It will make renters sick that they have to compete with AI sector workers whose cash-flush companies pay their rent for them. It will make renters even sicker to hear those AI companies do this to make their workplaces like “a frat house.”
We’ve known for several months now that San Francisco has the fastest-rising rents in the country, and that the sharp rent increases are because of the AI boom. But the New York Times has a new analysis of how AI companies are gaming the rental market in their employees’ favor, in some cases with $1,000-a-month rent stipends, or in other cases, simply paying the employees’ rent for them out of the company’s VC-rich coffers.
Which AI company is giving their employees apartments for free? That would be the “cheat on everything” app Cluely, helmed by 22-year-old Ivy League dropout CEO Roy Lee.
“Going to the office should feel like you’re walking to your living room, so we really, really want people close,” Lee told the New York Times. “I feel like I’m more trying to build a frat house, and you don’t commute to a frat house.”
Those sound like the words of a 22-year-old Ivy League dropout with $15 million in other people’s money to throw around. The apartment building in question is likely the Quincy, just a few doors down from Cluely headquarters, as that’s the nearest development belonging to the Strada Investment Group that confirmed the deal with the Times.
These ‘free rent’ and ‘rent stipend’ deals are already affecting open houses for apartments. According to the Times, AI workers are showing up to apartment viewings with “envelopes of cash in hand,” noting that one applicant “offered to pay the deposit on site, with about $7,000 in an envelope.”
That’s not good news for the vast majority of SF renters who do not work in the tech sector or aren’t made of money. The Times spoke to one such renter who instead works for a travel company, and has moved twice since arriving in SF in 2022. She said the third, most recent move was a whole different experience, with as many as 20 other applicants at open houses, and rejections often issued on the same day as the application was filled out.
“It was frustrating to just feel like you’re kind of doing things right in life — you have your job, you’re paying off your credit card — and you still aren’t in the demographic that can afford necessarily what you want,” that renter told the Times.
The Times uses CoStar data to assess the average monthly rent right now for an SF apartment at $3,315. That may be low. Zillow has it at $3,645 a month, Zumper assesses it at $3,650 a month. (Averages like these are typically based on large, newer-built apartments whose rents are made public, rather than older buildings around the city with fewer units.)
These fringe benefits for AI-employed renters are generally offered only for apartments that are very close to the workplace. The $1,000-a-month stipend company only offers this to employees who move within a ten-minute walk of the workplace — and the founder at that company notes he hasn’t gotten any takers since he relocated the offices to SoMa.
The Times points out that Mission Bay and SoMa are the most popular neighborhoods for workers in the AI sector.
So if you’re apartment hunting, you may be striking out in those neighborhoods. And maybe you’ll have to start thinking about Visitacion Valley, the Excelsior, or neighborhoods that are not near the headquarters of the “cheat on everything” app.
Related: SF Rents Rising Rents Faster Than Anywhere In the Country, So Thanks a Lot, AI Industry [SFist]
Image: Strada SF
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