How Techies Are Transforming San Francisco; A generation of technology workers is bringing startups, venture capitalists—and high real-estate prices

How Techies Are Transforming San Francisco

A generation of technology workers is bringing startups, venture capitalists—and high real-estate prices

SARAH TILTON

Jan. 9, 2014 7:33 p.m. ET

San Francisco has changed dramatically over the years as young tech workers have migrated to the city, causing a rise in real estate. Photo: Lori Eanes for The Wall Street Journal.Twitter‘s TWTR -0.09% headquarters. A high-rise apartment building where visitors sign-in on iPads. A jar of handcrafted applesauce for $14. Skyrocketing real-estate prices.

Nearly five decades after the Summer of Love transformed San Francisco into the epicenter of the hippie movement, a new generation is redefining this city’s culture again. No longer content to live and work in the quiet suburbs of Palo Alto and Menlo Park 30 miles south, thousands of young tech workers are migrating to the city, seeking a more urban, multicultural lifestyle. They are bringing with them a stampede of tech companies and venture capitalists, and inevitably attracting some homegrown resentment for jacking up housing costs and gentrifying once gritty neighborhoods.

Last year, venture capitalist Greg Gretsch, managing director at Sigma West, which has $1.5 billion under management, moved his office from Menlo Park to San Francisco’s Jackson Square neighborhood, a historic part of the city dating back to the 1850s that is now attracting the new digerati. He now walks to work from his Pacific Heights home and walks or bikes to visit startups in the South of Market, or Soma, district.

“Jackson Square is the new Sand Hill Road,” says Mr. Gretsch, 47, referring to the road in Menlo Park that has long been at the center of technology funding. “I’m surprised by how infrequently I go down [to Silicon Valley] because I just don’t need to.”

The cost of living is high among the new tech class. The median sales price for homes in San Francisco jumped 16% in 2013, according to the San Francisco Association of Realtors. “It was a year of shocking prices,” says Annie Williams, a real-estate agent with Hill & Co. in San Francisco. She ticks off the names of southern neighborhoods closest to Silicon Valley, such as the Mission and Noe Valley, that have been most affected by the tech boom. “It was shock after shock started by Zuckerberg.” In 2012, it was widely reported that Facebook FB +1.26% founder Mark Zuckerberg paid $9.9 million for a house in the city’s Mission District. A Facebook spokesman declined to comment.

In 2013, an 11,000-square-foot house in Pacific Heights on San Francisco’s Gold Coast—where neighbors include Apple‘sAAPL -0.67% Jonathan Ive and OracleORCL +1.22% billionaire Larry Ellison —sold for $35 million. In 2011, the house sold for $29.5 million.

Not everyone likes the changes wrought by the technocrat class. Protesters attempting to highlight the issue of rising rents in the Mission District recently tried to stop the private buses that take tech workers to their jobs at companies including Google, GOOG -0.01%Facebook and Apple. Musician Adam Theis, founder of the long-standing musical collective JazzMafia, hasn’t joined the protests but is among those who have been forced to leave the Mission after his rent for a two-bedroom apartment soared to $3,000 a month from $1,400.

Mr. Theis, 39, had lived in the Mission since 1997. “I was really lucky to have had that house for 15 years; it allowed us to have a place where we could create,” he says, adding that his apartment building was known as a gathering place for artists and musicians. Mr. Theis now lives in Oakland, but still has gigs in the Mission. “It’s not that people are trying to clear-cut or drive people out—there’s a balance missing of cultural consciousness,” he says.