This is the result of the new kinds of employees.
I have been to many start-ups. They prefer open loft space for two reasons.
First, they like working without walls or glass barriers in large spaces with plenty of light, high ceilings and a sense of informality. It is this loft space quality that supports informality.
The second reason is that informality is supported by the clothing of the employees who would be uncomfortable entering an office building and most significantly many of these informal employees bring their dogs to work. That won't work in a standard office building.
Fortunately, the economics in San Francisco work out such that office space that sells for $250 a square foot can sell for $800 a square foot as residential downtown space. Modification from office to residential can be done for less than $200 a square foot.
So office space is being converted to downtown condominiums while warehouses are converted to offices.