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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

#91

Post by jwilliams »

Epenthesis wrote: post #78
dataker wrote: post #39

While in SV, I couldn't understand the hate towards East Bay: it's fairly priced, close to the 'hub' and not as violent as otherwise portrayed. Could anyone elaborate?

I always thought a BIG benefit of SoMa is the fact that you can draw employees from East Bay and South Bay (as well as SF itself). On the other hand, a, say, San Mateo -> Oakland commute is pretty much untenable.

Yup. This is a huge advantage to SoMa. I even hear hesitations around FiDi as it's not easily accessible by Caltrain (let alone Oakland).

The Central Subway and new Transbay Terminal might alter this. That said, I don't think the new Transbay will directly link with BART -- will still be a walk, which is a bit of a shame.

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

#92

Post by sseveran »

bbcbasic wrote: post #50
sseveran wrote: post #18

Earlier quoted context omitted.

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

Probably not a good idea for startups whose long term success is unpredictable though.

i agree, but it does remove the landlord ;-)

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

#93

Post by SilasX »

stephengillie wrote: post #25
s73v3r wrote: post #15

Remote work and starting the company elsewhere are pretty easy solutions to this problem.

If all of your employees are remote, what do you show your investors, partners, board members, and creditors when they want a tour of your facility? How do you show them that you've got smart people working on hard problems? For some (bad?) startups, this is an even more valuable function of engineers than engineering.

Taking on significant, avoidable costs in order to signals qualities sounds like a failure mode.

It could be that there are cheaper ways to signal the health of an organization, or that they're not cheap enough to outweigh the SF premium.

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

#94

Post by _delirium »

nostrademons wrote: post #55
ffreire wrote: post #36

Earlier quoted context omitted.

Your response coupled with your username gave me a shiver, heh. That said, why would the Fed tighten money in the fall when we're so close to an election year? I know they hold longer terms to hopefully avoid political swings, but, it just seems like bad timing.

Well, if the Fed doesn't tighten, they're at a pretty high risk of introducing serious inflation into the economy. The high commercial rents are a form of inflation; so are the wages of tech workers, and people being priced out of the Bay Area. So far, this is local to a few industries and metropolitan areas, but if the Fed doesn't act you could see it start showing up in nationwide statistics. That said, I'm not ent…

On a nationwide scale, the oil-price crash is adding some offsetting economic slowdown (since the U.S. is a huge oil producer) which I think significantly reduces inflation risk. The previously booming energy sector is stalling and moving towards a contraction: reducing investments, laying off employees, etc. SF rents are going up, but Houston rents are going down. The overall engineering employment market is also getting slightly less tight as petroleum engineering is no longer sucking up every ounce of spare talent.

Plus just in terms of the benchmarks they watch: The headline CPI is currently at a miniscule 0.1%, way below the 2.0% target. The personal-consumption-expenditures (PCE) rate is somewhat higher at 1.3%, but still below the target.

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

#95

Post by pmorici »

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.

My bet is that Baltimore is poised to become a big tech hub. There was a ton of money spent in the tech sector after 2001 and that is tapering off now and you have a bunch of engineers with 10 years experience and the low cost of living in Baltimore which makes for a lot of opportunity to try things. The city also has a very Art oriented quirky culture like SF had before it priced out all the creative people and a lot of other things going for it like lots of cheap housing, right on the ocean, and several universities and colleges.

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

#96

Post by compostor42 »

briandear wrote: post #74
meatysnapper wrote: post #13

Earlier quoted context omitted.

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.

I never understood why investors need to be 'close.' I also don't understand why most startups need an office. Basecamp is entirely remote with an office just for show. They only use it a few times a year. Unless you build hardware, an office is unnecessary. A dumb waste of money, especially early in a startup's life. I do some side work for a major international medical lab and their entire Dev team is remote -- and…

>Making $140k per year is the San Fran equivalent of minimum wage

Is this really true? Seems far-fetched. Isn't that $20-30k higher than the Google base starting salary?

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

#97

Post by bbcbasic »

sseveran wrote: post #92
bbcbasic wrote: post #50

Earlier quoted context omitted.

Probably not a good idea for startups whose long term success is unpredictable though.

i agree, but it does remove the landlord ;-)

Just start in a garage I'd say. It's cheap and the darkness, the damp and the oil fumes are a motivator to success.

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

#99

Post by novaleaf »

fredkbloggs wrote: post #3

This is a great analysis and the argument makes perfect sense in every respect. The only thing I find dubious is the idea that the bust is 2-4 years out. I think if you polled most SF commercial landlords, they would tell you that they expect most of their startup tenants to start having difficulty paying the rent in no more than 18 months. It would be interesting to see some actual data on this. After all, there's n…

Based on the title, I expected this to be an article ranting about how someone thought their startup was being discriminated against.

Surprised that was, dare I say, "fair and balanced".

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

#100

Post by Fomite »

Domenic_S wrote: post #80
mbillie1 wrote: post #68

Earlier quoted context omitted.

All fair points, but remote work also has increased massively ( http://fortune.com/2015/02/12/lessons-learned-from-3-compani... ). It is interesting to consider that well-paid remote workers, free to live where they choose, may also be choosing to live in these bigger cities. I'm fully remote and I live in a city, albeit a relative small one (SLC), when I could easily pay a ~$300/mo mortgage for a small rural house i…

> ~$300/mo mortgage for a small rural house in the middle of nowhere How's the internet access out there?

In many communities, quite good.
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