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What I have learned from this recent New York Times article is that if you have a company with "AI" in the name — such as OpenAI, ScaleAI, Adept AI, Hayden AI, or Harvey AI — then you probably need to lease office space in an area of San Francisco (around the Mission District) that is now being called The Arena. Here's a map from the article:
The struggles of San Francisco's office market have been well publicized. At the beginning of this year, San Francisco had the highest office vacancy in the US at approximately 27.8%. But beneath this headline, AI firms have leased more than 5 million square feet in the city since 2020. And CBRE is forecasting that AI-related companies will lease another 16 million square feet between now and 2030. So here comes the boom following the bust — which is the bipolar way in which San Francisco generally likes to operate.
But what is also interesting is that, even in this brave new world of AI, blockchains, and remote work, agglomeration economies are alive and well. AI companies are choosing to physically cluster in The Arena because there are economic benefits to doing so. There are mountains of research to support the fact that it will make these firms more innovative and more productive due to knowledge spillovers. You don't want to be isolated from your competitors — you want to be cheek by jowl. Physical proximity matters and, therefore, cities matter.
So much so that the New York Times is now asking: What if San Francisco is the new Silicon Valley? In other words, could its center of gravity be right now moving from the suburbs to the city? That makes perfect sense to me.
Cover photo by Josh Hild on Unsplash; map from the New York Times
Urban sprawl is how much of the US provides new housing. And here's Conor Dougherty in the New York Times arguing that America needs more of it to fix its housing shortage:
Even if all the regulatory restraints were removed tomorrow, developers couldn’t find enough land to satisfy America’s housing needs inside established areas. Consequently, much of the nation’s housing growth has moved to states in the South and Southwest, where a surplus of open land and willingness to sprawl has turned the Sun Belt into a kind of national sponge that sops up housing demand from higher-cost cities. The largest metro areas there have about 20 percent of the nation’s population, but over the past five years they have built 42 percent of the nation’s new single-family homes, according to a recent report by Cullum Clark, an economist at the George W. Bush Institute, a research center in Dallas.
The obvious benefit is that the resulting housing tends to be cheap. The above article is filled with examples of people buying large homes for a few hundred thousand dollars in newly formed communities across Texas. And if you live in a high-cost city, the social algorithms have almost certainly found you at some point with a shockingly cheap house in one of these places. But, Dougherty also admits that sometimes this may be the only redeeming quality:
Escobar told me he moved to Princeton because he could find a big house there for less than $300,000, but now the city is home, and he didn’t like where it was headed. Over the next four years, he said, his goal is to redevelop the downtown, try to attract offices where locals can work and build out a park system that voters recently funded with a bond measure. “You ask anybody what they love about Princeton, and it’s simply just the affordability,” Escobar told me. “We need to be more than that.”
According to the article, this isn't necessarily a problem, because it's just how cities are built in this day and age. What you do is start with low-cost housing in fringe locations. You grow as quickly as possible until traffic becomes "godawful" and vital infrastructure can't keep up. Then you implement moratoriums on new housing, and start working on other uses like, you know, employment. Eventually, after all this chaos is complete, you end up with something that possibly resembles a real city.
Here is a chart, via the New York Times, showing the US states with the greatest net migration in 2023:
This is calculated by looking at the difference between arrivals and departures for each state, but only within the US. And for the first year since 2014, Texas has overtaken Florida, though admittedly not by much.
I saw some discussion about this on Twitter, but I think it's important to point out that this is only domestic migration. Between 2023 and 2024, the US grew by some 3.3 million people. And 84% of this growth (about 2.8 million people) came from international migration.
Cover photo by Leon Hitchens on Unsplash
Here are the most populous states:
Here are the top 10 states by numeric growth:
And here are the top 10 states by percent growth:
When looking at overall numeric growth, Texas and Florida still land at the top. (They're also among the highest in terms of percentage growth, despite already being the second and third most populous states.) But now states like California and New York show up on the top 10 list, which speaks to their ability to draw people from around the world.
None of this is particularly surprising, but I still think it's valuable to see the numbers.
Cover photo by Courtney Rose on Unsplash
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