San Francisco Hangout Becomes Casualty of Tech Boom
bits.blogs.nytimes.com
bits.blogs.nytimes.com
When the supply (almost) stays the same and the demand increases, the equilibrium point for rents is bound to increase as well.
It's largely driven by the city's height limits-- there are only so many square feet of usable housing you can fit within a given volume of space.
In other cities where I've lived, when a restaurant loses a lease in this manner, it's because the landlord has lined up a different tenant which they consider much higher value.
Think about it this way: if more high-rise apartments were built, then some rowhouses (or other inefficient [in terms of people per square foot of land] housing) could be torn down. Restaurants could be built in their places.
Thus the supply of restaurant space would increase, and the average price would accordingly decrease.
Blah blah blah. This isn't Econ 101. We have zoning laws, so no, all space is not the same.
I haven't checked, but I'm fairly certain that the Grove's location isn't zoned for residential use. In any case, I can guarantee that isn't what the owners are planning to do with the space, given its prime location on a high-foot-traffic, retail strip.
One more thing... you may have misinterpreted my comment. The situation I'm imagining is not the case where The Grove is turned into a residential development. It's the opposite — some residential areas are razed and rezoned for business, driving down The Grove's rent.
If you go South you get all the expensive "traditional" Silicon Valley cities. If you go East or North you have to cross a bridge, and a guaranteed commute nightmare. If you go West, well... You get to Hawaii.
That's what happens with technological progress, it ebbs at lifestyles and sects before they are even acknowledged to exist.
The sane way to handle renters vs owners is to restrict the amount rent can increase per year. It might slow gentrification and decrease profit of landowners but it would solve this restaurant's problem.
I own property in The Netherlands and rent it out to tenants. There are increased risks for me because tenants have a lot more rights in The Netherlands than in the USA. But having been a tenant in the past I can appreciate the stability that comes with restricting rental increases.
Does it mean I probably make less money? Yes.
But I like being able to walk around my city and not see homeless people everywhere.
It might be a demonstration that rent control without appropriate planning controls doesn't work so well. But that's a very different claim.
Very good ideas, comrade.
Businesses operate on leases, and usually long term leases, like 10 year leases for a restaurant. This will protect the business for the duration, then when it is up, its up.
I'm a commercial real estate appraiser. Real estate already has very low margins (10% - 20% for strong operations) - how do you expect the property owner to maintain the property (expenses, taxes, mortgage) and make enough of a profit to consider holding onto said property? Let's turn that around - you presumably like your job. Now, take a 40% pay cut - can you still afford to keep your job?
NYC has rent control, and it's hardly a vast slum.
And as a counter-dynamic, overbuilding and its associated crime rate increase is another way to turn a city into a slum. Few things breed crime like abandoned housing.
Grocery stores average a 2.5-3% profit margin, and I'd consider them a pretty essential business (because, you know, you have to eat).
I bet there's a nearly identical story from the gold rush era.
Source:
Great article from a fantastic writer. She, apparently, hates me, and I disagree with a lot of what she's said here, but still, great article.
This cannot be good.
I don't really agree with a lot of this. It seems written by someone who is frustrated that they're not part of the "tech boom" and is angsty about gentrification of the city. There's not much actual critical commentary here; just a lot of complaining that people with lower-paying jobs are being out-marketed by those paid well at tech companies, specifically focusing on their age or that they look like students.
The reality is that owning property is not a right, and market forces can push you one way or the other. Just like New York and Brooklyn, or London and Camden/Islington, those people who can't afford "crazy" rents will move elsewhere (likely Oakland). There's no trickery or deception of these "young people" making six-figure salaries instead of driving cabs or making lattes. They simply chose to learn a skill in high demand. Just because they're "uncool, a little out of place" or "Asian male nerds in their twenties" doesn't mean they can't move to the neighborhood. And their salary is a direct reflection of the value they are adding at these tech companies (or often less, actually). It's certainly not charity.
There's a feeling of jealousy and borderline bohemian supremacy in the author's tone that doesn't sit well with me. Sure, the Google and Apple busses are nice. Both of those companies pay literally billions of dollars in taxes every year. Perhaps that money could be spent creating a better public transit system. Any New Yorker or European will tell you that the BART is laughably inadequate for the Bay Area. Imagine if traveling from Williamsburg to Manhattan took over 45 minutes.
Before Steve Jobs passed away, he presented plans for their new campus to the Cupertino city council. Part of the city's feedback was to ask for free WiFi. Jobs said that he always thought the role of companies was to pay taxes, and the city to take care of public needs. I feel the same way.
She writes, "[The Google Bus] means that the minions of the non-petroleum company most bent on world domination can live in San Francisco but work in Silicon Valley without going through a hair-raising commute by car." A sentence dripping in hyperbole. Those busses keep thousands of additional cars off the highways, and helps San Francisco avoid being a giant parking lot. They save hours of otherwise wasted time by some of the brightest minds in the world. How can you argue against carpooling?
More than anything, it's actually the city of SF that's limiting growth. It takes over 3 years to get permits to demolish and build new structures in older areas of the city. A huge wave of new permits went though recently, and I know of at least 4 new buildings on Market Street, and 7 or 8 apartment buildings in the Mission. But it's still not enough. To match demand, the Dogpatch should really be filled with high-rise apartment buildings. Or at least fix the Bart and build in Oakland (lots of folks are moving there anyway).
This stance highlighting market inequality doesn't propose a solution, and therefore just seems narcissistic banter to me. Maybe this is just my capitalistic tendencies, but I bet the author wrote that post on a Macbook, did her research with Google, and shared it with her readers via Facebook and Twitter. And most people reading it will be doing it on an iPhone or Android.
It's really amazing how underdeveloped the area is. It looks like a 50-year-old farm town.
The article mentions an annual rent of $246k. Assuming the place is open 360 days per year and 10 hours per day, that amounts to $68 per hour. If there are 20 tables in the restaurant, the rental cost is around $3.40 per table-hour at full utilization. This seems achievable for a popular restaurant.
The space was vacant for a long time, and I don't think the landlord ever got the new rent - something happened to the local economy around 2001, but I can't quiet remember what.
While the above story describes a real problem in SF, it
ignores two much more significant contributors to the
issue that interlock with the effects of tech money.
First, SF residents are extremely anti-development and
NIMBYism runs rampant. It is ridiculously costly, time
consuming, and difficult to renovate or build anything in
SF. Add in a corrupt city planning process that was
deliberately designed to allow just one person to hold up
any project, large or small, and the result is a extremely
restricted supply of both residential and commercial real
estate.
Second, the most influential opinion-leaders and elected
officials are virulently anti-business. This has led to an
oppressive level of mandates, fees, permits, taxes,
licenses, and neighborhood activist oversight to be
imposed on all businesses, from the local mom-and-pop dry
cleaner to the few remaining large companies based in SF.
So, the combination of the influx of highly paid (or
already affluent) residents, an essentially fixed and
unchanging real estate stock, and a deeply ingrained
hatred of private economic activity by both politicians
and active voters result in places like the Grove being
penalized for their success. The problem cannot be reduced
to a simplistic case of rich tech workers throwing down on
starving artists.
http://bits.blogs.nytimes.com/2013/04/21/san-francisco-hango...
This is one person's property rights versus another's, not property rights versus something else.
Your statement, 'what culture?', taken out of context, describes the situation perfectly.
Why are these newcomers with their hefty salaries moving to the Mission, instead of some suburb closer to their work? Because of the culture. The music, the art, the creative forces that make San Francisco the appealing place that it is. Guess who isn't making enough to afford even $1500/month rent? That same artist who made this neighborhood the place you want to be in.
I am heavily involved with the art and music community in San Francisco and I don't see ANY large influx of young tech workers getting involved with or even supporting local artists. Sure, if some touring indie rock band plays The Fillmore it is filled with Facebook employees, but that's not the sort of grass root support that feeds a living artistic community.
Your job making web sites and iOS apps does not make you an artist or even a remotely credible creative individual, no matter how much smoke your fellow tech friends are blowing up your ass.
Thank you for setting me straight about my job making web pages and iOS applications.
When you get some artists worthy of grassroots support, trust me, it'll come. Believe it or not, I came to SF 6 years ago to become a writer. It took me less than a year to realize that most of the writers in SF live in denial and are delusional. They believe the writing community here is as great as LA and NY and the only reason they can't get published is because of the evil, corporate publishing companies. This type of attitude is typical for all walks of life in SF, too, which is one of the reasons it will never regain the artistic prominence it had in the 60's. SF has yet to move past its counter-culture roots, despite the fact the rest of the country already has. That makes everything holding on to the old message feel dated and stale. Dated and stale do not make for good art.
>This story isn't about The Grove, it is about the tragedy of gentrification.
Gentrification isn't the real tragedy, here. It's complacency. Manhattan remains THE center of art and culture in America, despite several decades of heavy gentrification and a staggeringly high cost of living that SF has only recently been able to match. What's your excuse, again? They're closing your favorite late night hangout? Find another.
If you follow http://www.dnalounge.com/backstage/log/ you get a pretty good view of some of the regulatory obstacles.
I'm not an idiot. I recognize Ayn Rand's novel Atlast Shrugged for what it is: fantasian philosophy. However, I read it to understand people influenced by it. One tiny part of then novel kind of explains radicals to me.
Mystics of Spirit: Right Wing Religious nuts who want to force you to suspend reason to placate their moral world-view by modeling all your actions according to their deity, evene if these actions are, in your mind, considered wrong/evil/etc.
Mystics of Muscle: Lefty nuts who want to force you to suspend reason to placate their moral world-view by giving money to others who are quantified by the group as "needing" it the most. "Need" is never straightforward or clear. It is something that, like fashion, shifts over time and often is imagined.
In this case, the "need" is for San Francisco to never change, and for people in houses to never have tall buildings block their view, because........ well, they have no real reason that isn't in some way imposing their unquantifiable need above the very quantifiable problem of too much demand and too little supply.