SAN FRANCISCO -- One front window of the small office supply store was covered with plywood, while the other greeted three new kids on the block: "Welcome Twitter, Yammer, One Kings Lane."

"We've been pretty desperate, but everyone is hoping this is the thing," said John Forrey, a sales clerk at the shop near the Civic Center, referring to the high-tech neighbors pouring into the distressed, gritty area along Market Street.

Outside, the noise of jackhammers, drills and cement mixers overpowered the buzz of buses and trolleys. Metal scaffolding hugged the long-neglected Art Deco building where the social media company Twitter now occupies three floors. A high-rise housing complex is going up across the street, and the buildings behind and next door to Twitter are being renovated as well.

High-tech companies are booming once again in San Francisco, even in the mid-Market corridor, previously known more for its proximity to transient hotels, social service programs, panhandlers and homeless people pushing shopping carts. The evidence is everywhere, from rental bidding wars to cranes on the skyline and plans for a reality TV show featuring would-be entrepreneurs pursuing startup fantasies in San Francisco.

"The innovators and entrepreneurs want to be here," said Alex Tourk, a political consultant working with sf.citi, a new association of tech companies that grew to almost 300 members in its first six months. "They see it as the innovation capital of the world. More and more companies are coming here from Silicon Valley. It's a very exciting time for San Francisco."

The city, hoping to see a boost in jobs, welcomed the new companies into the depressed area with open arms and a payroll tax exemption on new hires over the next six years – a savings of more than $20 million for Twitter, which expects eventually to employ about 2,500 workers at its Market Street office.

A ballot measure in November is asking voters to extend the break to larger employers citywide.

The pounding of construction sounds sweet to many who do business in and around mid-Market Street, as they watch tech workers in jeans and sweatshirts pile off the bus or pull their bikes up in front of office buildings.

"It's more vibrant," said Nick Chadwick, a software engineer, standing in the lobby of the apartment building across from Twitter, where he moved earlier this year for a job at nearby Zencoder.com, a cloud-based video encoding service.

The gym in his building is suddenly busier, there are more people in nerdy T-shirts ("like that one," he said, pointing to a young man in a shirt sporting a large purple elephant) and the line at Starbucks is long. As he spoke, a security guard roused a man sleeping on a bench in the lobby.

"I stop to tie my shoe, and I get hassled now," said Daniel Aldridge, who was sitting outside on the sidewalk with his set of drums fashioned from plastic buckets.

He blames new neighbors for greater police presence.

"We have to hide out to play music," Aldridge said. "People are calling in noise complaints on me in the middle of the day."

Others in the city, where finding affordable housing resembles a competitive sport, complain about the jump in rents.

The average monthly apartment rent in the first quarter of the year increased 13 percent – to $2,734 – from the same time last year, according to Real Facts, which conducts surveys on apartment data.

Chadwick said he researched 10 places before finding his apartment. Jake Guernsey, a marketing and branding specialist who does not work in the tech industry, said he and two friends showed up earlier this summer at an open house in the Sunset District only to find 20 other groups waiting to see the unit, which was going for $3,500 a month. Shortly afterward, he and his friends thought they'd found another one for $3,000 a month, but they lost it to a renter who volunteered $400 more.

"There is no limit to how much these guys will spend," said Guernsey, who finally found a place through a friend before it went on the market.

Tales like this are bound to cause flashbacks of the dot-com bubble in the late 1990s, when money flowed easily into Internet companies, and new millionaires popped up overnight. The bust that followed in 2000 left vacant offices and empty wallets.

"I want to say it's different this time because it's built on more real products and services," said Karen Wickre, a spokeswoman for Twitter, who remembers the last boom because she was there, working for an online gift site that scaled up fast, then folded.

"There are still startups whose model is to get acquired, and maybe they make a useful gadget or doodad and will get acquired," she said. "But it doesn't seem like funding just goes to any idea. There is more tech embedded in things and more thinking about something that has value."

Some say there is also a conscious effort to do things differently, spurred in part by a requirement that companies getting the tax break sign a "community benefits agreement."

Zendesk, the first company to take advantage of the break, has started looking for ways to conquer the "food desert" in mid-Market, where most residents live in hotels or tiny apartments where it's hard to cook or store fresh food.

"Desk software seems pretty removed from philanthropy," said Tiffany Apczynski, public relations manager. "But we are trying to make things easier for people. We want to use that same startup drive to help the community."

The idea, she said, is to "co-exist and not dominate" in the firm's new neighborhood, about four blocks from Twitter.

"This is not just a flash in the pan," said Tourk of sf.citi. "What you're seeing is the future of work in San Francisco."

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