SF's AI boom can't stop real estate slide, as office vacancies reach new record
cnbc.com
cnbc.com
This is a correction that makes sense: occupancy is shifting to benefit the small businesses that provide amenities like restaurants and shops.
SF's attempt to make office park-like experiences in transit deserts made a lot of money for real estate developers but these properties need to be massively written down.
Same as NYC, there's a concentration of multi-millionaires that choose to live there. I highlight them specifically because they can live lavishly anywhere they want. That's not a... mistake?
Maybe people don't like the transit, though?
That said, I would likely need 30-40k from a company to give up the personal convenience of a <60 second commute, the ability to get fresh air when I want it, etc. And when I am in coding mode, the absolute quiet is a must.
Coders like being at home.
The organized environment, easy coffee, and not needing to dedicate a bunch of home office space make it a big win for me personally.
On the other hand I live a mile away from my office and bike in, and I don’t ever want to go back to an hour long commute.
So whoever's loudest, rudest, and wrong wins over someone quiet, polite, and right?
This is totally orthogonal to AI working.
1. Unreliable and expensive public transportation 2. Expensive tolls and parking 3. High number of car break ins 4. Just a general ugliness to the city: trash, feces, homeless encampments, open drug use, graffiti and boarded up storefronts, crime, and mental illness on full display
Make it easier for people to come in and make them want to come in. With a budget of billions of dollars for such a small city, you'd think these issues would be addressed quickly.
The fact is, the Giulani / Bratton reforms worked. But I guess you prefer more crime. Even if you're the one being mugged?
"The number of stops increased dramatically in 2008 to over half a million, 88% of which did not result in any fine or conviction, peaking in 2011 to 685,724 stops, again with 88% (603,437) resulting in no conviction. Leading to the remaining 82,287 resulting in convictions. On average, from 2002 to 2013, the percentage of individuals stopped without any convictions was 87.6%." [1]
Not terribly distinctive. They got it right less than 1/8th of the time. If that is your argument, that they were only stopping people they think had guns and were going to commit a violent crime, it's a terribly poor one. The vast majority of people were detained by the police with no cause other than looking a particular way.
[1] https://en.wikipedia.org/wiki/Stop-and-frisk_in_New_York_Cit...
I guess that means you're happy with going back to the early days of Bratton's policing, then? By 2008 the battle was mostly won.
Assuming I believe your numbers (a stretch, but stay with me): do you have some other way of catching those 82,287 convictions? Or you just don't care?
The reason they were in minority neighborhoods is that that's where the crime is. And also where the crime victims are.
Would you support this countrywide? Would you also support something like increased internet surveillance? A digital stop and frisk of every person, so we can catch all the digital bad guys? If so, why not? Because you might get caught up in it? I'm wondering where your line for these sorts of impositions is. It's easy to be for something if you don't expect to get caught in it.
I know that if I was mugged I might be more prone to accepting this sort of liberty loss, but that wouldn't be because I changed my ethical stance, it'd be because I was hurt and scared.
> I value liberty more than punishment
Putting your thumb on the scales and misstating the question. It's not about "punishment" -- it's safety. Yes, fear of punishment does dissuade some criminals from preying on victims.
And you've just admitted why NYC'ers broadly support stop-and-frisk: because they're "scared", too. As if that's something to be ashamed of.
As for "if you don't expect to get caught in it" -- you're right, I don't look like a mugger. You probably don't, either.
The vacancy rate downtown? A mere 14% and only 10% in the Metro Region. Low during an era when other cities such as Calgary and SF are experiencing double that rate.
https://www.biv.com/news/real-estate/metro-vancouver-office-...
So I don't think it's homelessness etc that is causing any of these problems. After all, both SF and Vancouver had a severe homelessness and drug problems well before the pandemic.
It is likely that SF's especially tech oriented economy may be a factor, as tech is particularly WFH friendly and may be keeping WFH going on longer than other places.
Vancouver's excellent public transit system may have helped in return to office efforts. When I hear people talk about how great WFH his, they often talk about how miserable their old commutes were. Fix the commute and maybe RTO is more appealing.
But fixing the commute problems is not really something SF can do alone. I do not believe at all that a city alone can move the needle on public transportation, unless we're talking about affordable projects like bike lanes. Vancouver's rapid transit system is only possible due to significant funding from both the Province and the Federal government. The Feds just bailed out Vancouver to prevent service cuts.
TransLink set to receive $825M from federal gov’t funding over five years https://vancouver.citynews.ca/2024/07/03/translink-canada-go...
I’d say another factor in Vancouver’s favor here is the concentration of people who live downtown amongst the office towers. San Francisco’s downtown is relatively empty by comparison. So when the office workers left, it hollowed out entirely.
These are just some anecdotes. But I would tend to agree with your comment that it’s unlikely just the drugs and crime keeping offices empty in SF.
I don't have familiarity with the needs of digital effects workers, but I'm unsure that there were any technical barriers for the games folks. There were games studios that shipped games during WFH with all PCs and dev kits on site due to IP issues. The solution was Parsec, a pretty much magical piece of software that is essentially ultra low latency remote desktop.
I remain shocked that so few companies outside of the games industry use this, and the software seems not well known, but maybe everyone else just ships people laptops.
Of the big cities I've visited (in CA, OR, WA, IL, DC, NY, CO, NV) and in other developed countries, I think SF is by far the worst, with Seattle a close second and Portland not far behind.
There's a bazillion variables to consider when discussing the livability of a city, but it seems like there is something in particular going on with the major West Coast cities, especially the ones with a lot of income inequality like San Fran and Seattle, where all the nice places are owned by rich tech people and there's not much left for anyone else. On paper they all claim to be solidly leftist, but their realities on the ground are much harsher, with people shitting and shooting up and dying left and right and no real feeling of community or solidarity. They to have very car-dependent cultures too and inferior public transit, which seems to decrease the likelihood of seeing "regular" people walking on the streets.
It was a very different feeling from, say, Chicago, where, yes, there's also crime and mental illness, but most parts of the city felt incredibly safe and warm and neighborly. I felt much more uncomfortable and unsafe in SF than I ever did in Chicago or DC or Denver.
I grew up spending much of my childhood in the SF Bay Area, but it's gotten so much worse in recent years, seemingly in line with the tech booms and then especially the COVID exodus (towards rural communities and WFH). I don't know whether this is a failure of policy or planning or politics or something else, but it's so sad that a city with so much money can fail so badly at being livable. I don't know how the richest state with all these amazingly smart and wealthy people can just turn a blind eye to all the suffering there, unable to provide even basic shelter to so many thousands. Every time I visit Europe or Asia, I become ashamed of the US (and myself).
Are there no objectively testable and verifiable "best practices" for city management? How do other states and countries manage these same issues? We can't be the only ones facing drug use, homelessness, etc. But we are definitely one of the richest societies, so it's not just a problem of budget. What sorts of successful implementations have been done elsewhere?
BART is quite expensive, I agree, however it stands for Bay Area Rapid Transit and is not actually managed by the city of San Francisco, but rather the multiple SFBAY counties it serves. That's the one that's used the most by workers coming into and out of the city and there's little SF can do about BART's pricing.
BART itself is facing a funding crisis, and there's a lot of chaos on the trains regularly, unfortunately, which deters a lot of people from taking it.
The solution isn't to subsidize driving + parking even more than it already is, but to fund public transport properly so that more people can take it easily.
Edit: White Plains to Grand Central costs $13 on peak while Mountain View to 4th and King is $8. Both are about the same driving distance
They're working on extending Caltrain into SF's transit center, but that's currently a ways off.
[1] https://www.sfchronicle.com/sf/article/map-downtown-san-fran...
https://www.cbsnews.com/sanfrancisco/news/san-francisco-muni...
Muni makes me miss Chicago's CTA, which I used to think was the wild-west for crime till I moved here.
The point the defendants of the city model fails to accept is that the city have had many reasons to exists, nowadays the sole left is financial capitalism, than need "the sharing economy" where 99% own nothing and have to share scarce resources piloted by the social score imposed by the 1% who rule. This model is untenable environmentally, humanly and practically, see from Neom to Arkadag, Innopolis, ... failures as a proof. The new deal is technically only possible in a spread society of small semi-autonomous buildings where there is room to evolve, room to relocate to livable areas (landslides, wildfires, floods etc) for the present and future time when for instance we can pump water so we do not need to live in the deepest part of a valley to get clean water every days knowing we will be flooded occasionally like before.
Cities have finished all others economical reasons to exists and nowadays having buildings occupied less than 12h/24 commuting between them so see ads (shop windows) and casually click on them (consume what they sell) it's a waste of resources we can't afford for all.
You can see this model as the "universal city factory".
This model need density, not too much but enough and it's not only not needed anymore, but it's now incompatible with current tech and climate change. Since the '80s logistic became cheap and quick enough that delocalizing became a better option then being nearby your customers, with modern TLCs/IT we do not need the office anymore because we do not need to work with paper physically walking around. We need websites/APIs as "the office where you need to go to file tax, make a payment etc", a desktop as a tool to act instead of walking around. Modern logistic also demand space: delivery anything in a dense city is a nightmare delivery in a sparse area, not too low dense but still sparse, it's a pleasure, there is room to park everywhere, no issues reaching the nth floor with potentially heavy and big package and so on. Oh, yes you need to travel a bit more, but hey, there is plenty of space for p.v. and your delivery van fleet might have quick replace batteries like Renault QuickDrop at yours warehouses. Similarly those who not WFH still have parking places where they work in a fixed location to plug their EV and recharge from local p.v. being not anymore artificially spread for the sake of car makers like USA suburbs but being intermixed like EU Rivieras you still do not made too much distance to have recharging issues. Having a bit of space around and small buildings allow for cheap constructions and evolution. This is the new "right density" for the economy of scale.
Only there are some looser: in this model we all own, so no market for Uber, we eat in fixed locations with plenty of space, not while commuting so, no market for Just Eat, room at home for anything so no various services like public washing machines and so on. The financial capitalism loose dramatically while a new spread, quickly evolving, in a constant change without the need for much revolutions, of SMEs etc flourish. Not everything can be done at this scale, like steel production but hey, even Apple have planted a small foundry hidden nearby some homes. We definitively can work in most cases at small scale. Unfortunately the big losers are also much powerful and disagree.
> This model need density, not too much but enough and it's not only not needed anymore, but it's now incompatible with current tech and climate change.
Interesting, that's backwards for me. It's true that technology means we no longer have to shuffle pieces of paper around, but that doesn't change the fact that some people like being around other people. As far as climate change, imo a few dense core cities are better than endless suburban sprawl because by taking up less per person, there's more left over for nature. If it's dense enough you don't need a car which is better for the environment because you're walking everywhere.
Apple gets away with a tiny foundry in Cupertino because they have Foxconn to run great big factories in China. That's not a globally workable model.
Liking does not means is cheap or sustainable though.
> few dense core cities are better than endless suburban sprawl because by taking up less per person, there's more left over for nature.
Actually it's the opposite, first because you do not need less per person, you do need more in natural resources:
- big buildings demand much more infra around and themselves consume much more raw materials to be built, beware that OLD buildings are another beast respect current one with seismic and fire safety, energetic performances, ventilation and so on. In the past a small 4-5-storey building (let's say 20 apartments) was on-par or even a bit cheaper than 20 correspondent homes because homes tend to be bigger and have 20 roofs. But such ancient buildings does not care about how much energy they need to heat, they have no cooling, no seismic designs, ... they are just "CA boxes" stacked around with small additions (clean and dark water, electricity, windows etc). Things have changed, elevators, stairs, also have their slice;
- supporting infra is much more impacting as density, few dense are is like sit on few staple, it hurt, MUCH, you create heavy masses (subsidence), divert much water altering water cycle for a very larger area, produce much concentrated pollution, absorb much heat (a big slice of thermal mass exposed to the Sun) and so on, again modern cities are not old ones still made of small buildings where peoples tend to work at ground floor living "just upstairs", there are still no factories in cities anymore, because nowadays change is quick enough and scale vary enough we need room to change and a dense city is too dense for that, so you still need to go back and forth the city and moving all goods etc;
- finally the most important: cities can't evolve. Today "A-class" homes are tomorrow G-class, today needed infra are tomorrow relic and missing new needed infra, just see how hard is in dense EU cities parcel delivery. We have had parcels before, they were just rare and letters just common, now it's the opposite so they can't got delivery on feet by the postman nor they enter the small set of post box in the hall and it's a new logistic nightmare, such a small change such a big issue. To change a city you need to rebuilt it and that's dramatically expensive.
Also, nowadays in spread area (beware, spread A BIT, not large ranches around the Steppe) you do need to travel MUCH LESS than before, first all works doable from home should and can be WFH, witch just erase commuting for a big slice of population, having longer trips to buy food means you stock more at home and you have room to stock, so for instance instead of buy small packaged stuff where the package is single use and prominent respect of what's packaged you buy large stuff with much less disposable package. Being able to do much more via web means again much less trips. In the end you travel of course, but much less than before, and you can travel electric on scale, because most people can recharge at home or at work (where the work is in a fixed place, from local p.v.). You probably thing about USA style suburbs where there are ONLY homes for a very big area and somewhere else ONLY shops etc, such design it's not the spread design, it's the Ford design to sell more cars. The kind of density I advocate is the EU Riviera model, where homes and shops are intermixed, so you still have few shops in 1 km, a school nearby and so on. Where you can live in a 30km radius instead of 15' walk ignoring the immense infra and supply chain needed to serve you in the 15' setup.
The only who benefit from modern dense cities are those of the financial capitalism that need such "big scale" to rule, at a less dense scale they fail. Maybe local foundries are untenable but that's not true for much more, in the end we can have few cities to serve some productions composed only of workers for a certain period of time, of course workers have family, children but it's still a temporary location, they'll go out when retiring or changing job and in that case such cities became much smaller. The New Urban Agenda essentially agree we can't build large dense cities, Neom, Arkadag, are good examples of such failure as original Fordlandia, but they still hope to build small cities of essentially slaves, who depend by third party services, owning nothing, to live, and even if that's might be possible it's not good for nature nor for us. Now take a look at "urban" air mobility push https://www.easa.europa.eu/sites/default/files/dfu/uam-full-... did you think it could be "urban"? I think it PERFECTLY much a spread living, matching actually the old model of the gentleman who run by car seeing slaves working by feet around, the advertise like https://appliedevtolconcepts.com/ who perfectly mach '30s car advertisement.
They’re burning billions mostly in datacenter runs. AI researchers could be doing 1M+ total comp per year but there aren’t that many to fill vacant office space.
Well, yeah, you're two years too late.
IMO I expect to see something give over then next 3 years, with some markets taking longer to correct.
Covered puts wouldn’t be net short. They're net neutral or positive as the puts expire worthless if the price doesn’t drop.
You can hedge your puts by buying some calls to limit the max exposure if the price rises.
Buying puts would be a net short position.
pun intended
sorry :)
can anyone explain the difference between shorting a stock and the opposite of it, if any? and what both of them mean? ELI5, please.
I've read about it from long back, but have been too lazy or never thought to check out what it meant, since I don't do much share trading.
double sorry.
If you short a stock at 100, and it reaches 10, you pay back at 10 and get to keep the remaining 90.
If, however, that stock reaches 300, you have to pay the extra 200 from your pocket.
So shorting is much bigger risk than investing directly in stocks.
There are less risky ways, like buying a put option.
Short: you borrow a stock, sell it, hold the money and later on buy the stock back at a lower or higher price you originally sold it for. Then return the stock to the person who lent it to you.
Shorting a stock is borrowing the stock: that is, you get a share of stock today (and sell it today for market price $X) but are liable for returning the share of stock at some time in the future (you obtain it from the market at $Y to do so). The profit or loss is thus $X - $Y. Since there's no upper bound on the price of a share but the lower bound is $0, you can gain at most your initial outlay $X if the price goes to zero, but potential losses are uncapped.
the sale so shorte, the profitt so longe to earne ...
It's still way too high. Try $10 per sq ft.
This is, for lack of a better explitive, fucking awful for the economy. If you have a restaurant district and everyone's paying "maximum sustainable rent", the customer is getting the "minimum sustainable product". If you spend $10 on a salad, more of that money that could be going to fresh local lettuce is being spent on rent so you get a worse product for that $10. The existence of the landlord isn't making the economy bigger better faster wherever, they're...literally just rent seeking.
[citation needed]
IIRC Google halted their SJ mega-campus plans, are there any other major moves happening?
1. https://vitalsigns.mtc.ca.gov/indicators/jobs-by-industry
Detroit wasn't very springy.
30+% vacancy means it's still vastly overpriced,
Alternative theory: As WFH improves, WFH will increasingly mean "Work from Ukraine," "Work from India," and "Work from Ghana." It will be hard to justify SFO salaries.
There are few advantages to living in SF.
- Central America is a convenient plane hop away, and in the same timezone.
- Parts of Africa and India are anglophone, which makes life easy. Africa is at least somewhat timezone compatible (calls might cut into evening plans, but you don't lose sleep)
The cost-of-living relative to Vietnam is low enough to not matter. There are also middle-income countries where cost-of-living is a bit higher, but with much better infrastructure. Plenty of Southern and Eastern Europe is at about a third of the per-capita GDP of the US.
TL;DR: Travel around and shop for what fits you.
This theory is bullshit. Outsourcing has been a thing for decade. Moving all work to the cheapest possible place has been tried many times, to varying degrees of failure.
- Whether people move with the work
- Telework infrastructure
[1] https://tildes.net/~design/1g5r/nathan_berman_has_helped_res...