Within the next few years Facebook, Google will have huge headquarters (currently under construction or planning) right next to Amazon's collection of buildings in Seattle, and Microsoft near by.
I think the issue startups have in Seattle is they expect to pay less than in SV, because cost of living is cheaper. However with some negotiation the Big 4 will pay you the same as in SV, while paying a quarter of SV rent for a nice apartment with a walking commute.
I guess that lingering smell of urine keeps people coming back to SF?