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SF's AI boom can't stop real estate slide, as office vacancies reach new record
- aiauthoritydev 2y ago[flagged]
- blackguardx 2y agoWhy does the party matter when SF gov has many disparate factions with different agendas? They don’t operate like a single party.
- asdasdsddd 2y ago[flagged]
- blackguardx 2y agoI don’t know much about how the CCP operates, but China is not a democracy. They don’t have elections in China. San Francisco has elections with numerous candidates.
- throwup238 2y agoIt increasingly does: https://www.uscc.gov/sites/default/files/2022-11/Chapter_1--CCP_Decision-Making_and_Xi_Jinpings_Centralization_of_Authority.pdf https://www.uscc.gov/sites/default/files/2022-11/Chapter_1--...
- aiauthoritydev 2y ago> They don’t operate like a single party They basically operate like mafia at the table.
- yieldcrv 2y agothe standing committee would like to know your location, affirm the territorial unity and sovereignty of the city and county of san francisco immediately
- jjoonathan 2y agoOffices revalued due to increase in WfH? Those dastardly Democrats must be at it again!
- aiauthoritydev 2y agoI know several companies relocated precisely because of the corruption and mismanagement. Stripe is a good example and their building remains unoccupied to my knowledge. More companies have moved out citing SF to be unsafe to operate in. https://abc7news.com/1-billion-dollar-artificial-intelligence-company-replit-abandons-san-francisco-for-bay-area-peninsula/14757284/ https://abc7news.com/1-billion-dollar-artificial-intelligenc...
- sam0x17 2y agoMy WFH-driven long bet against commercial real estate that I've held since pre-covid times continues to bear fruit
- lumost 2y agoIs there an effective means of shorting commercial real estate available to retail or "small" accredited investors? Seems like an easy bet to take.
- itsoktocry 2y ago>Seems like an easy bet to take. Well, yeah, you're two years too late.
- lumost 2y agoPrices haven't really fallen yet to my knowledge. There is a lot of resistance to letting prices fall (marking to market), and many commercial real estate deals are multi-year. RTO mandates indicate that larger employers aren't yet willing to give up office work. IMO I expect to see something give over then next 3 years, with some markets taking longer to correct.
- freitzkriesler2 2y agoYes, just short real estate investment trusts for commercial property, write puts (options) against these shares (warning make sure they're covered and not naked), or throw money at many of the ivnerse ETFs out there.
- koolba 2y ago> warning make sure they're covered and not naked 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.
- 2y ago
- doctorpangloss 2y ago> the average asking rent dropped to $68.27 It's still way too high. Try $10 per sq ft.
- boulos 2y agoIn case it's not obvious, that's an annual number.
- epicureanideal 2y ago(Doubles down on $10 per square foot.)
- AnarchismIsCool 2y agoAs you fucking should. I tried renting commercial real estate and it was an absolute joke. Like $3k/mo total NNN for 1ksqft of crumbling cement cube in the shitty part of town.
- infamouscow 2y ago$0.01 per sq ft. Final offer.
- AnarchismIsCool 2y agoA typical NNN lease (what businesses use) is priced in terms of dollars per square foot per year. A reasonable number would, in fact, be $10/sqft/yr plus the NNNs (insurance, utilities, taxes, another ~$5 maybe) but the land owning class insists it's closer to $25 all in for a crappy shack and whole number multiples for anything "nice".
- fragmede 2y agoWhat are the inputs that go in to $10 being the "right" price? SF's minimum wage? Tax rates by bracket? A desire for things to be cheaper?
- michaelbrave 2y agoit was a bubble, bubbles pop eventually
- aurareturn 2y agoAnd SF will likely bounce back, bigger than ever. It's a cycle.
- asdff 2y agoSF bigger? Not if the current city government has any say, which is a large part of the issue. Why invest in SF with their 16 new units of housing a year when you can just invest in san jose which is increasingly the center of gravity of the bay area, especially the longer the government of SF acts like toddlers?
- teractiveodular 2y ago> san jose which is increasingly the center of gravity of the bay area [citation needed] IIRC Google halted their SJ mega-campus plans, are there any other major moves happening?
- asdff 2y agoIts both larger than SF and growing faster than SF. The economy of the bay area is bigger than just software engineering. If this statistic is to be believed, information technology jobs in the bay area only account for 6% of the job market anyhow (1), although they make up the vast majority of the job related headlines for the bay area I am sure. 1. https://vitalsigns.mtc.ca.gov/indicators/jobs-by-industry https://vitalsigns.mtc.ca.gov/indicators/jobs-by-industry
- frognumber 2y ago... perhaps. I'm less optimistic. 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.
- fundad 2y ago"companies are looking to relocate to higher quality space in more desirable parts of the city, because prices have come down and employers need to be near restaurants and shops to get staffers to come back" 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.
- Animats 2y agoWhat are the "more desirable parts of the city" with "restaurants and shops?" Union Square? No. SOMA? Not any more. Mission Bay? Boring, plus ballpark traffic. Dogpatch? The cheap warehouses are taken. Financial district? Old skyscrapers. Mid-market, near Twitter and City Hall? You've got to be kidding.
- apsurd 2y agoSounds like you just don't like SF. That's ok but it doesn't actually explain anything. 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?
- Animats 2y agoThere are nice residential areas, such as Pacific Heights and parts of the Sunset.. But where are the nice, homeless-free office areas?
- skybrian 2y ago"Transit deserts" is not what's going on here. Bart, Muni, the Salesforce Transit Center? There's lots of transit. Maybe people don't like the transit, though?
- Animats 2y agoEither AI doesn't work, and there's little demand for office space for people working at AI firms, or it does work, and there's little demand for office space for people working at AI firms.
- dvt 2y agoThe AI angle feels like clickbait in this article. Not sure what the fact that Anthropic and OpenAI leased some offices has to do with a sector-wide commercial real estate dropoff (which is not just happening in SF, for the record).
- solardev 2y agoThere's only one answer: We teach AI how to work and pay rent and we all become landlords instead.
- asdff 2y agoThis is already being done at least for some properties around the country. One Wilshire in LA was built for law firms in the 1960s, now hosts a data center with a huge amount of internet traffic going through it.
- telotortium 2y agoInfeasible for AI workloads because of their enormous power consumption. It’s far cheaper to run additional electrical capacity in rural areas, so that’s where new data centers will have to be.
- teractiveodular 2y agoNeither? The article's argument is that the market is down overall, with most firms cutting down on real estate, and AI firms are the rare exception that's still expanding. But this isn't happening because AI "works" or "doesn't work", it's happening because AI firms are flush with VC cash.
- fragmede 2y ago
- darth_avocado 2y agoThe city (and it's defendants) refuse to acknowledge or address the problems that prevent people coming to the city: 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.
- binarymax 2y agoCrime and homelessness aren’t areas that can be addressed quickly - unless the method is morally questionable
- Cupertino95014 2y agoNYC reduced crime enormously in the 1990's and beyond. Were those methods all "morally questionable" for you?
- locopati 2y agobroken windows policing and stop and frisk were indeed morally questionable strategies as they were primarily used on minority communities
- deleted 2y ago[deleted]
- asdff 2y agoThe rub of this is people conflate to race what they should conflate to economic circumstance. A poor white person is no more or less likely to commit a crime of opportunity as a poor black person, but most people don't understand nuance much less statistics or demography or history. It also doesn't help that a lot of police back then as well as today are racist.
- skybrian 2y agoI'm wondering what non-traditional uses people will find for this space as rents drop? In Manhattan, there are a few developers who seem to be doing well at converting some office buildings into housing [1], but it seems like quite a challenge. Perhaps there are better uses? [1] https://tildes.net/~design/1g5r/nathan_berman_has_helped_rescue_manhattans_financial_district_from_a_doom_loop_by_carving https://tildes.net/~design/1g5r/nathan_berman_has_helped_res...
- debacle 2y agoI love being in an office. I think it makes me more productive (in my role, 10% coding 90% management), I enjoy the face to face communication, and I think it is difficult to do some of what I do from my home office. 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.
- frognumber 2y agoManagers like being in an office. Coders like being at home.
- joebob42 2y agoFor whatever it's worth: coder, like being in the office :) The organized environment, easy coffee, and not needing to dedicate a bunch of home office space make it a big win for me personally.
- SketchySeaBeast 2y agoDo you live close to the office?
- joebob42 2y agoYes, I do live quite close, although that's because I moved closer on purpose. I enjoyed the office even before I live as close (it used to be a 30m commute, now more like 15), but the longer commute definitely made it a slightly less obvious tradeoff. I'm not required to be in the office; with the shorter commute I'm there everyday, whereas with the longer one I was there maybe 4 days a week.
- SketchySeaBeast 2y agoYeah, about 15 is the furthest I'd be wiling to go for an in office job. Otherwise you're losing an hour a day just to travel.
- nojvek 2y agoAI firms don’t hire that many people. 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.