KPMG Survey: San Francisco Business Leaders Plan to Increase Hiring and Expand Commercial Real Estate Footprint

NEW YORK, Feb. 18, 2025 – While San Francisco’s post-pandemic recovery has taken a different trajectory than most major cities, business leaders are signaling renewed confidence in the market’s long-term growth. According to a new study released today by KPMG LLP, the U.S. audit, tax, and advisory firm, companies based in San Francisco plan to increase hiring and expand their real estate footprint and see generative AI adoption as a top investment priority despite economic uncertainty.

Among the San Francisco business leaders surveyed, 96% believe the city is well-positioned to attract new businesses and talent, including startups, over the next 12-18 months. Additionally, 91% express confidence in San Francisco’s economic growth prospects, and 75% plan to expand their commercial real estate footprint in the next 12-18 months —a sign of long-term investment in the region’s future.

“San Francisco’s business community is focused on growth, not retreat,” said Chris Cimino, KPMG San Francisco Office Managing Partner. “Leaders are making long-term investments, balancing workplace flexibility with in-person collaboration, and positioning their companies to compete in an increasingly AI-driven economy.”

The KPMG 2025 Perspectives: Local Insights from San Francisco report surveyed 100 business leaders (64% C-suite; all VP-level and above) at companies with annual revenues of more than $50 million on the key challenges and opportunities shaping business growth in the city. Key findings are highlighted below.

San Francisco business leaders are optimistic about the city's future, showing strong confidence in both their companies’ growth prospects and the region.

“San Francisco is not standing still,” said Cimino. “Business leaders are making long-term investments—expanding their teams, growing their office presence, and reinforcing the city’s role as a hub for talent and business. Their commitment to hiring, real estate, and innovation underscores confidence in San Francisco’s future while reaffirming that the city remains a major force.”

• San Francisco business leaders express high levels of confidence in the growth prospects of their companies (96%), the city (91%), state of California (92%) and country (92%).
• 96% believe the city is well-positioned to attract talent and new businesses, including startups, in the next 12-18 months. 
• 75% plan to increase their commercial real estate footprint over the next 12-18 months.
• 68% of respondents plan to increase in headcount in 2025.
• 88% believe the San Francisco talent pool is superior to other regions across the U.S.
  
• Issues top of mind for their businesses reveal the impact of increased disruption and the challenges of navigating long-term structural change.
  • The top three issues included: AI or GenAI implementation (55%), economic and market conditions (40%), and risks of geopolitics and tariffs on supply chain (33%).
• 84% say the provisions set to expire at the end of 2025 from the Tax Cuts and Jobs Act (TCJA) will have a moderate to high impact to their overall organization.

San Francisco business leaders are positioning themselves for a high level of strategic M&A activity in 2025, with the majority planning transformational deals.

“San Francisco’s business landscape has long been defined by bold, strategic deal-making,” said Conor Moore, Global Leader, Private Enterprise at KPMG. “In 2025, I expect more of these leaders to step off the sidelines of the deals market. From acquisitions to joint ventures, businesses are making transformative moves to scale and solidify their competitive edge.” 

• 77% of San Francisco business leaders plan to pursue strategic transformation deals. 56% plan to make bolt-on acquisitions.
• 45% plan to pursue deal making in the first half of 2025, with another 26% expecting to do so in the second half of the year.
• 47% expect to enter joint ventures, and 43% plan to pursue minority investments, reflecting a strong emphasis on collaboration and strategic partnerships.

San Francisco business leaders surpass all other surveyed cities in AI readiness, prioritizing generative AI investments, rethinking workforce strategies, and strengthening cybersecurity to meet the demands of an AI-driven economy

“San Francisco businesses are at the forefront of AI adoption, embracing its transformative impact on industries and the workforce,” said Francois Chadwick, Global Emerging Giants Leader, Tax Partner at KPMG. “Companies are investing in AI and upskilling employees to stay ahead. As AI continues to evolve, business leaders are making bold moves to ensure they remain competitive in an increasingly AI-powered economy.”

• 90% of respondents agree generative AI is a top investment priority, even amid ongoing economic uncertainty.
• 88% of business leaders today said they expected AI to have a moderate or significant impact on their organization, compared to 78% a year ago.
• 90% say they are rethinking the skills required for entry-level roles.
• 87% believe their organizations are equipped to upskill their employees to fully leverage the benefits of generative AI.
• 82% of respondents express concern about the potential impact of generative AI on company culture.
• Leaders are confident their organization’s cybersecurity can keep pace with AI advancements (90%), ability to access suitable cybersecurity talent and solutions to defend against AI threats (91%).
• 92% are increasing investments in cybersecurity to protect their operations and intellectual property from AI-related threats.

San Francisco businesses offer the most comprehensive workplace benefits among all surveyed cities, reflecting a strong commitment to employee well-being, engagement, and retention.

“San Francisco has always been ahead of the curve, and that extends to how businesses invest in their people,” said Cimino. “In the heart of the tech industry, companies recognize that top talent expects more than just a paycheck—they’re looking for workplaces that support their well-being, career development, and flexibility. Business leaders here are making strategic investments in benefits that set them apart and keep their workforce engaged for the long run.”

• The greatest challenges business leaders in San Francisco anticipate in 2025 as it relates to their workforce are employee engagement (43%), upskilling and reskilling initiatives (37%) and recruiting and retaining top talent (34%).
• 53% of business leaders say they are providing 32-hour work weeks today due to efficiencies gained by using AI. 
• 96% feel they have successfully optimized their organization's work arrangements (i.e., hybrid, in-office full time, remote), yet 91% are trying to make their hybrid work arrangements work more effectively and 85% report they have changed their approach to work arrangements in the last 12 months.
• 79% say they are trying to bring employees back to the office more frequently.
• Business leaders cite increased employee engagement and connectivity (65%), increased productivity (61%) and improved professional development and mentoring opportunities (56%) and as the primary motivation for encouraging employees to return to the office.
• To enhance their organization’s employee experience, 58% said they would consider a 4-day, 32-hour work week and 46% said they would consider a 4-day, 40-hour workweek. 42% said they would consider a 9-day work week, where employees have every other Friday off. 
• 40% said they would consider offering a flex work schedule where employees work a set number of hours at a specific time with the remaining schedule flexible at their discretion. Only 15% said they would consider an arrangement with no formal work schedule (employees work when they choose as long as work gets done).
• To enhance their organization’s employee experience, San Franisco business leaders say they are offering incentives such as regular onsite happy hours (68%), more frequent free meals (63%), full coverage of commuting and/or childcare expenses (54%) and GLP-1 coverage (52%).

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