San Francisco, a city both scarred and built by money from the tech industry, this year will be at the epicenter of what are predicted to be two of the three largest IPOs in history.

Anthropic announced Monday (opens in new tab) that it had started the process to go public, setting up a city-altering financial event that could have lasting impacts on housing, the economy, and culture.

In addition to Anthropic, which is valued at $965 billion, ChatGPT maker OpenAI and Elon Musk’s SpaceX, which houses xAI, are expected to go public. Their employees may come into millions, while executives and founders become billionaires and rank among the richest people in the world, if they aren’t already.

The bulk of the money from these public offerings won’t go to the local workers — it’ll be redistributed to investors around the world. But ripple effects of the payouts to equity-holding staff and executives will be felt in the city where thousands of AI employees work and live. It will flow into the local economy, fattening real estate listings and filling charities’ coffers while further pricing out middle- and lower-class families and businesses.

“Whatever value the IPO of OpenAI and Anthropic will be, the wealth that stays within the confines of San Francisco is going to be a fraction of that,” said Enrico Moretti, an economics professor at UC Berkeley. But “the employees, especially the earlier employees, are going to be rewarded, and they are, to a large extent, local. So that’s money that stays.”

There is not enough information to calculate how much wealth company founders and early employees will see. Anthropic filed a confidential S-1, and OpenAI has not yet filed. What we do know is that Anthropic has more than 1,300 employees in the Bay Area and is growing, the company told The Chronicle in January. OpenAI has not shared its local headcount, but it will soon have about 1 million square feet of office space in the city to accommodate a growing staff. It is listing 512 job openings that can be based in San Francisco. xAI is headquartered in Palo Alto, and its parent company is in Texas.

The Bay Area has been shaped by sudden influxes of wealth, whether it’s the eye-popping salaries the tech industry has normalized or past IPOs. Those events will be dwarfed by OpenAI and Anthropic going public, but we can use them as windows into what will happen next.

“If you look at what happened in the past 20 years, every time there are episodes like this, you also see an increase in demand for services that are not tech services,” says Moretti.

In 2019 and 2020, a cluster of smaller tech companies that had headquarters in San Francisco went public: Lyft, Uber, Slack, and Airbnb, all with market caps of less than $100 billion. In 2012, Menlo Park-based Facebook went public with a $104 billion valuation, minting hundreds of millionaires — though the stock price had dropped by the time many were able to sell. Twitter followed, on a much smaller scale, in 2013.

The money that stays local spills over into sectors like restaurants, entertainment, medical and legal services, and, of course, housing. Moretti has also found an increase in donations to local charities, from both corporations and individuals.

Tech IPOs have notoriously led to an increase in housing prices and rents because of the city’s limited stock. Moretti says pro-supply housing policy in the city — which is below its pre-pandemic population peak of 873,965, in 2020 — may help it absorb some of the demand this time around. But AI boom speculation has already contributed to bidding wars, increased condo prices, and a mansion shortage throughout the Bay Area.

The AI boom’s effect is underway, according to Karen Chapple, professor emerita of city and regional planning at UC Berkeley. Cash offers for houses from well-paid AI employees have already distorted the housing market, she says, and it has primarily hit San Francisco.

She agrees that the money will trickle into other industries; specifically, the kinds that appeal to the wealthy: personal services, high-end boutiques, and other niche businesses. That could price out more essential retailers.

“You’re operating on such a thin margin if you’re a grocery store or hardware store or mom-and-pop — you have a 5% margin,” said Chapple. “The temptation for your landlord will be to rent to the boutique retail or high-end restaurant. That has impacts on livability and accessibility.”

Even with more housing supply, a newly minted class of millionaires snapping up property can reshape the city.

“Because you have crowding into certain segments of the housing market, you have new patterns of segregation emerging. Areas become more and more exclusive, and once they become exclusive, it’s hard to reverse,” she said.

The city itself will see some of that money in local taxes, including rising property taxes, but not enough to make up for its structural deficit, which is projected to grow to $1 billion by 2029, according to Moretti.

“I doubt that two IPOs will be enough to cure the budgetary hole of San Francisco city and county,” he said.