(To recap just how this all started with a plastic bag of poo, please see Part 1: The “No Es Bueno” San Francisco Land Grab )
The crazy commercial and residential land grab in San Francisco is not new news to anyone who lives in the Bay Area. It was just my personal first brush with how insane it’s all gotten in the run up of the past 6 years since we first took a commercial lease. Ah, those were the salad days of early 2008, where SF office space hovered at “bargain” prices of $30 / square foot.
For those of you (well, okay, maybe it’s just me) who find the price-per-square-foot number a little inscrutable — it’s basically the annualized cost per square foot for a rental. So an office space of 10,000 square feet at $30 / square foot will cost your firm a nifty $300,000 to rent for the year.
How little I realized what a bargain those olden days were.
I learned quickly, for when our office lease was about 6 months away from expiring, we started conversation with our current building management team about the potential cost of renewing. I nearly fainted in my chair when I was told that current market for our building and spaces like it was running between $52 and $60 a square foot in our neighborhood.
Just based on the sheer 80-100% increase in rent alone, it was becoming clear for our bottom line that we’d need to look around for a new office space.At this point, in the interest of full disclosure, I should say that I’ve only helped create this quasi-dire office space situation by limiting my search area to the side of San Francisco that is absolutely the most competitive for commercial space currently, thanks to the tech boom. It’s the area known as SoMA (South of Market) combined with a few nearby streets in the Mission district.
While I’ve never been one to be driven by tech trendiness in making business decisions, there are truthfully some solid reasons why tech startup companies flocked to the SoMA area (and it’s not because of the SF Giants home ballpark).
The major commuter train transportation hub, otherwise known as Caltrain, comes to rest in the heart of SoMA, which enables numerous non-SF dwellers to commute from as far as San Jose 45 miles away as it travels up through the Silicon Valley and Peninsula corridor. It’s also close-ish to the BART stations lining Market Street as well. And it features a number of funky, trendy smaller office spaces in unique buildings with lots of light and architectural features, the kind of space that suits both unconventional start ups and also my firm, a design firm with Silicon Valley clients.
In short, for my business, SoMA was and still is best area of San Francisco for an office space.
And yet, despite having run my business successfully in San Francisco for over 9 years, it seems that we, too, were now being priced out of the market (or forced to downgrade significantly).
While I’ll refrain from making any poor-me comparisons to the truly displaced residents, I have to admit that I can feel a few twinges of the frustration of having been based in a place as both a resident and a business owner (the latter activity which created jobs), of paying local taxes, and of generally contributing to the local economy by patronizing other local small businesses.
After contributing productively as such for 9 years, I suddenly found my ability to rent a suitable office in my home city becoming more and more difficult, priced out by small startups whose biggest contribution to the world so far, besides creating a mobile app that let’s them rent the air around their apartment, is that they believe they’re “disrupting disruption” and that they are proudly developing a corporate culture based on “awesome snacks.” (I am not making any of this up, although I may have combined a few startups.)
This whole experience has a distinct quality of what I imagine it would feel like to wake up one morning and find out every apartment in your building was rented at ridiculously high rents to spendthrift 13-year olds; these youngsters were given a wad of cash and no adult supervision. Sure, they might do *alright* for a while, until they spend all their cash on shiny new MacBooks and In-and-Out Burger and Twizzlers and can no longer afford the rent, at which point they flee and leave the mess for someone else to clean up. And your rent’s 45% higher than before and not going down.
But lest you worry – I’m far less likely to protest my commercial situation by throwing rocks at a Google bus, or by picketing the Twitter offices; however, I haven’t ruled out asking those companies to let us sublet for a while…after all, they both have SOOOOO much more room, and we don’t need much space at all and will keep very quiet, I promise.
And more importantly, did we find a new space? More on that in another post, but I promise you, this story DOES have a happy ending…stay tuned for this to all be wrapped up neatly with a sparkly bow in Part 3: I do have a Real Estate Fairy Godmother After All…