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Landlords are trying not to rent to startups in San Francisco

42floors.com

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Re: Landlords are trying not to rent to startups in San Francisco

#11

Post by [deleted] »

fredkbloggs wrote: post #6
rdl wrote: post #2

Obvious arbitrage possibility is obvious, and being exploited by new companies (WeWork for $10b valuation) themselves -- if you're better at evaluating startups than big dumb landlords, you can profit here. And there isn't a shortage of capital to play this game.

If you're skilled at evaluating startups and have access to capital, owning real estate is a waste of time. This isn't an arbitrage opportunity. At best it's just borrowing short to lend long: the liabilities of the spot lease firms are in long-term leases and debt owed against owned real estate; the assets are short-term and demand leases on that property. This is no different from what gets overextended banks in bi…

[deleted]

Re: Landlords are trying not to rent to startups in San Francisco

#12

Post by meatysnapper »

mooreds wrote: post #9
comrade1 wrote: post #5

Wow. I remember this is exactly what happened in 2001 and 2007. Maybe things are different this time.

Large landlords with experience are probably a better group to bet on (in terms of understanding long term economic trends) than startups. Just like the bond market is a better indicator of economic growth than the stock market. More money, more professionals, longer memories, not as much optimism. Edit: future economic growth expectations, rather.

As much as I'd like the US to crash to reality a bit so we can get our house together... a Chinese slowdown + European clusterfuck makes the US the best place to invest, still. That gives this boom a slightly longer lease on life.

Re: Landlords are trying not to rent to startups in San Francisco

#13

Post by meatysnapper »

mooreds wrote: post #7

Or, consider starting a company outside of San Francisco. Not just outside of SoMA, actually outside of San Francisco. (I know, I know, blasphemy.) Eventually the price of real estate and labor will be so high that the relative disadvantages of other locations will not matter.

I think the advantage of a massive skilled labor pool and investors within walking distance is a nearly insurmountable advantage.

For a small company, I'd say the time/cost of hiring a few good engineers is way more than a few months rent. You'll certainly pay a respectable headhunter quite a bit.

Re: Landlords are trying not to rent to startups in San Francisco

#14

Post by astazangasta »

mooreds wrote: post #7

Or, consider starting a company outside of San Francisco. Not just outside of SoMA, actually outside of San Francisco. (I know, I know, blasphemy.) Eventually the price of real estate and labor will be so high that the relative disadvantages of other locations will not matter.

Eventually we might consider that rent is just outright theft, we're not actually paying for value, landlords are parasites who suck surplus value from the economy, etc.

Re: Landlords are trying not to rent to startups in San Francisco

#16

Post by mooreds »

meatysnapper wrote: post #13
mooreds wrote: post #7

Or, consider starting a company outside of San Francisco. Not just outside of SoMA, actually outside of San Francisco. (I know, I know, blasphemy.) Eventually the price of real estate and labor will be so high that the relative disadvantages of other locations will not matter.

I think the advantage of a massive skilled labor pool and investors within walking distance is a nearly insurmountable advantage. For a small company, I'd say the time/cost of hiring a few good engineers is way more than a few months rent. You'll certainly pay a respectable headhunter quite a bit.

Hmm... Eventually the massively skilled labor pool will cost so much that the advantage will disappear. Good point about the investors, though.

We'll see. Perhaps it really will be an exogenous event which will halt the San Francisco craziness.

Re: Landlords are trying not to rent to startups in San Francisco

#17

Post by mooreds »

astazangasta wrote: post #14
mooreds wrote: post #7

Or, consider starting a company outside of San Francisco. Not just outside of SoMA, actually outside of San Francisco. (I know, I know, blasphemy.) Eventually the price of real estate and labor will be so high that the relative disadvantages of other locations will not matter.

Eventually we might consider that rent is just outright theft, we're not actually paying for value, landlords are parasites who suck surplus value from the economy, etc.

You're paying for the location and services (well, with NNN leases, just location). What other value do you need?

Re: Landlords are trying not to rent to startups in San Francisco

#18

Post by sseveran »

astazangasta wrote: post #14
mooreds wrote: post #7

Or, consider starting a company outside of San Francisco. Not just outside of SoMA, actually outside of San Francisco. (I know, I know, blasphemy.) Eventually the price of real estate and labor will be so high that the relative disadvantages of other locations will not matter.

Eventually we might consider that rent is just outright theft, we're not actually paying for value, landlords are parasites who suck surplus value from the economy, etc.

You could also build/buy your own office. Then there would be no landlord.

Re: Landlords are trying not to rent to startups in San Francisco

#19

Post by s73v3r »

meatysnapper wrote: post #13
mooreds wrote: post #7

Or, consider starting a company outside of San Francisco. Not just outside of SoMA, actually outside of San Francisco. (I know, I know, blasphemy.) Eventually the price of real estate and labor will be so high that the relative disadvantages of other locations will not matter.

I think the advantage of a massive skilled labor pool and investors within walking distance is a nearly insurmountable advantage. For a small company, I'd say the time/cost of hiring a few good engineers is way more than a few months rent. You'll certainly pay a respectable headhunter quite a bit.

Most decent sized to large cities in North America have a large skilled labor pool.
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