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San Francisco Hangout Becomes Casualty of Tech Boom
- Argote 14y agoSan Francisco's high rents are more due to the fact that the city has refused to build more housing stock (particularly, high density housing). When the supply (almost) stays the same and the demand increases, the equilibrium point for rents is bound to increase as well.
- rdouble 14y agoHow does lack of housing cause high rents for restaurants?
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- Scaevolus 14y agoReal estate is at a premium, and it's reflected in both high apartment rents and high commercial rents. 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.
- rdouble 14y agoThe rents of restaurant and residential properties seem like orthogonal issues. I have never read that San Francisco has a shortage of retail or restaurant 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.
- mhjacobson 14y agoSpace is space is space. 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.
- timr 14y ago"Space is space is space." 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.
- mhjacobson 14y agoThe zoning restricts the market somewhat, but it like anything else can be changed. Didn't mean to come across as patronizing above — sorry if I did. 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.
- _stephan 14y agoAt some point city planners should ask themselves how many billions of dollars of higher rents per year the benefits of a flat city skyline are worth to its residents (and how to fairly balance the interests of property owners and renters).
- JPKab 14y agoGasp You mean you want a bunch of NIMBY idiots to quantify their issue? If they did that, there would be a big problem, because it would plainly illustrate how absurdly greedy they are being.
- eloisant 14y agoAn other reason is that SF is on a Peninsula, so it can't really have a workable suburb. 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.
- dmix 14y agoI propose a more accurate headline: San Francisco Hangout Becomes Casualty of Real Estate Policy.
- smutticus 14y agoHow about: San Francisco restaurant becomes casualty of America's obsession with private property rights. 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.
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- HunterV 14y agoRent control? New York tried that, it didn't go so well. http://online.wsj.com/article/SB122126309241530485.html http://online.wsj.com/article/SB122126309241530485.html
- vidarh 14y agoI don't see any evidence in that piece of how it "didn't go so well". What I see is sentence after sentence that indicates that there are too few apartments available at reasonable prices. That might be exacerbated by low rents and distorted incentives, but how would it help if more flats were built because prices were high enough to make it attractive? It might be a demonstration that rent control without appropriate planning controls doesn't work so well. But that's a very different claim.
- encoderer 14y ago
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- HunterV 14y agoOr if on Chrome, view it in incognito.
- grbalaffa 14y agoLots of SF residents and business got squeezed during the mid-2000s real estate boom too, however there seemed to be far fewer of these sorts hand-wringing articles back then. There is something about tech in particular that triggers a lot more consternation than other types of booms.
- grinich 14y agoI think there's a not-so-subtle distain for "outsiders" moving to these areas and out-pricing locals. It also often happens in gentrifying areas of lower socioeconomic level, but those stories don't make it to the NYT... I bet there's a nearly identical story from the gold rush era.
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- spitx 14y agoYou cannot even begin to understand the degree of disdain these folks have for techies without reading Rebecca Solnit's diatribe on Silicon Valley's employee shuttles ruining the city. Source: http://www.lrb.co.uk/v35/n03/rebecca-solnit/diary http://www.lrb.co.uk/v35/n03/rebecca-solnit/diary
- ajays 14y agoI dunno... how many techies are there in the Marina? I thought the techies dominated SOMA and chunks of the Mission. Marina feels like the playground of the trustafarians, not nerdy techies.
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- hasker 14y agoCommercial real estate often operates with longterm leases and sometimes pre-defined renewal options. It is quite possible this restaurant signed a ten year lease in the shambles of the last tech bubble and now needs to renew the lease.
- gojomo 14y agoThe Grove prices are already astronomical, and it's always busy when I stop by, so if they can't cover rent there, I wonder what business could.
- seanmcdirmid 14y agoAn Apple store? You could do much better per sqm of retail space than a restaurant (you can do much worse also).
- gojomo 14y agoThere's already an Apple store about 3 blocks from Chestnut's Grove. But perhaps eventually San Francisco can become one giant Apple store!
- seanmcdirmid 14y agoTotally. Obviously, San Francisco can't just become one huge apple store, but the fact remains that some high-end retail can do much better with real estate so that a high SQM price doesn't really affect them. The only question is: how much high-end retail does the market really need? And people have to eat also.
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- spitx 14y agoI think Durga's comment on the NYT site puts it best: 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. Source: http://bits.blogs.nytimes.com/2013/04/21/san-francisco-hangout-becomes-casualty-of-tech-boom/?comments#permid=2 http://bits.blogs.nytimes.com/2013/04/21/san-francisco-hango...
- guelo 14y agoYea well, those silly stupid San Franciscans with their disregard for market forces and the natural unstoppable march of property rights will soon be pushed out of their city and the culture they created will be gone and the capitalist homogenization of another city will be complete. Just like god intended.
- tptacek 14y agoWhat "culture" would that be? A 10-year-old restaurant in the Marina? I lived in SF in 1999 and never heard "The Grove" called "San Francisco's living room". This is one person's property rights versus another's, not property rights versus something else.
- patio11 14y agoI'm incapable of reading any reporting on "these damn young square techies snapping up all the desirable places in our hip urban areas" without hearing "... when those areas were clearly designed to be affordable for successful members of society, like brilliant young journalists at this publication."
- batgaijin 14y agoyoung bloggers, please.
- patio11 14y agoWithout agreeing that journalists are more credible than bloggers, I think the discursive intent of that correction seems to be jibing at her social status. That's adding insult to injury, if the injury is the real difference in purchasing power between young techies and young journalists. The jibe isn't even accurate, as she has articles in the print edition, as well.
- batgaijin 14y agoI have no problem with her socioeconomic status. I think a lot of journalists are just very upset with the notion that other people can write equally well, and thus it is a communal act instead of a career option. I mean, I am sorry, but you know that she most likely wants the 'golden days' of newsprint back (whether or not she experienced it) simply because of the career stability. And she would probably be happy with the other regressions in society that would imply. That's what happens with technological progress, it ebbs at lifestyles and sects before they are even acknowledged to exist.
- subsystem 14y agoI think it's interessting that there are all these articles about scrappy startups, passion projects and how programmers are artists, but at the end of the day if you're not making six figures people still look down on you.
- uvdiv 14y agoThis place is apparently close to the center of SF: http://goo.gl/maps/zwBes http://goo.gl/maps/zwBes It's really amazing how underdeveloped the area is. It looks like a 50-year-old farm town.
- jonknee 14y agoApparently you haven't been to many 50-year-old farm towns in the US lately. (All these businesses would be closed and a Wal Mart Supercenter would be off a highway somewhere close).
- jweir 14y agoAnyone remember Ristorante Ecco in South Park? Its rent double around 2000. 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.
- john_w_t_b 14y agoI lived in the Marina in 1999 and don't remember the Grove either. Spent many weekend mornings eating breakfast at other trendy cafes on Chestnut Street. 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.
- dredmorbius 14y agoYou're confusing income with profit. Restaurant utilization is also highly variable through the day, and cafes often have long loiter times on tables. Paying rent out of $3.40 left over after materials, labor, and other non-rent expenses, even on an upscale café's inflated prices, is fairly challenging.
- bane 14y agoYet places in Chinatown selling cheap tourist kitsch don't seem to have the same rent struggles.