Commercial real estate is hot again in San Francisco. Companies with leases expiring in the South Bay are deciding to move their operations to San Francisco to be closer to tech workers, cheaper rents, and the city lifestyle. Yahoo and Microsoft already have offices in San Francisco and Google may soon be joining them. Also other existing SF tech firms are expanding their space.

Due to the increase this will have on commercial real estate lease prices, residential real estate prices may also go up. Perhaps the upward pressure on commercial prices brought about by the influx of Web 2.0 companies will offset the overall slowdown in the residential real estate market. This effect is likely to be stronger near downtown, where the tech companies are located, and not in the outer districts like the Sunset or the Richmond.

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