San Francisco real estate prices are rising rapidly, and real estate investment trust Essex Property Trust stands to benefit, Piper Sandler said. The investment bank upgraded ESS from neutral to overweight on Sunday, claiming the firm is “receiving tailwinds” from a “rapid AI-powered recovery” in Bay Area real estate values that is bringing more highly paid professionals to the city. “The Bay Area’s recovery is underlined by a lack of new supply, and landlords are benefiting as a surge in tech demand is pushing up prices,” Piper analyst Alexander Goldfarb said in a note. “Office is showing a bidding war due to reduced display space, even with availability rates across San Francisco at about 30%.” Goldfarb said ESS believes second-quarter earnings will be driven by the “accelerating” Bay Area and will raise its guidance. Piper also has overweight ratings on other office and retail REITs (BXP, BRX, FRT, KIM). “It’s too early to move to the Sunbelt…The Coast is still a good place to be in 2026, but the Sunbelt will likely gain market traction later this year, with 2027 setting the stage for acceleration,” he said. Although real estate prices in San Francisco have stabilized in recent years, it is now the metropolitan area with the second-fastest annual rent change, according to research from Apartment List. Prices in San Francisco have increased 5.1% year over year, trailing Virginia Beach’s 5.2% increase and San Jose’s 4.8% increase. “The Bay Area’s two largest cities, San Francisco and San Jose, are in the top three, as the AI boom is flooding them with high-paying tech jobs,” Apartment List analysts wrote. According to Redfin, in March 2026, San Francisco home prices were increasing at an annual rate of 19%, with a median price of $1.7 million, or 280% above the national average. The group said the median price per square foot in San Francisco was $1,110, up 9.2% from last year.
