How Much Tech Can One City Take?

In spite of the obvious urban warts, the word is out: San Francisco is the world’s leading tech paradise.

At a rate eclipsing the dot-com boom of the 1990s, tech companies are setting up shop in the city by the hundreds, drawn by its beauty and livability, as well as the deep pool of engineering talent here and, yes, city hall’s increasingly tech-oriented policies. Young entrepreneurs from as far away as Denmark, Singapore, and France can be seen with real estate agents in tow, roaming through converted South of Market lofts still vacant from when the previous bubble burst more than a decade ago. The city is currently home to more than 1,700 tech firms, which employ 44,000 workers, up a whopping 30 percent from just two years ago. And San Francisco has been the nation’s top magnet for venture capital funding for three years in a row. Consequently, the distinction between Silicon Valley and San Francisco has all but disappeared. It is us, and we are it. The city is clearly benefiting from this new mind meld. San Francisco’s 7.6 percent unemployment rate handily beats the state’s 10.9 percent rate, and it’s one of the few counties in California that has experienced significant property-tax growth during the economic crisis, driven largely by the hot real estate market in the tech-heavy SoMa area.

The new tech boom has helped add $6 billion to the city’s tax rolls over the past year—an increase of more than 4 percent over the previous fiscal year. There’s a sense of pride and excitement in the air, a feeling that—once again—we’re the ones creating the technologies that are driving the digital era. San Francisco is quite literally changing the world. But despite all this, there is trouble in paradise.