
San Francisco Office Rents Pass Manhattan as Most Expensive in Country - e15ctr0n
http://bits.blogs.nytimes.com/2016/01/08/san-francisco-office-rents-pass-manhattan-as-most-expensive-in-country/
======
raldi
SF has a law (1986's Prop M) that restricts the supply of new office space:
[http://www.sfgate.com/bayarea/article/S-F-law-blocks-tech-
bo...](http://www.sfgate.com/bayarea/article/S-F-law-blocks-tech-boom-
expansion-5652707.php)

One saving grace of the law is that in years when nobody wants to build, the
city "banks" the excess for years when construction is over the limit. But
we've just about exhausted those savings, and are now hitting the cap.

The developers and the owners of existing office space know that the carryover
is about to run dry, and that the cap is going to be in full effect every year
for many years to come, and are pricing their long-term leases accordingly.
And companies, knowing the same thing, are signing them.

Did you hear that the Sierra Club is going to have to leave the San Francisco
headquarters they've occupied since the 1800s, because the rent is now too
high for them to afford? ([http://www.sfexaminer.com/sierra-club-moving-
headquarters-fr...](http://www.sfexaminer.com/sierra-club-moving-headquarters-
from-sf-to-oakland-due-to-rising-rents/)) The irony is that those rising rents
are due in no small part to their acting against their stated mission when it
comes to allowing tall buildings in this city. They'd rather sprawl people out
into the suburbs and beyond, where they'll bulldoze swaths of nature to build
their buildings, and the people living and working there will have much larger
carbon footprints.

~~~
Tempest1981
To be livable, a city needs a balance between 3 things:

    
    
      - Business (commercial real estate)
      - Housing
      - Transportation (streets, busses, trains, flying cars)
    

The first 2 are easy, since they're very profitable to the city and
developers. But taxpayers don't want to pay for transportation, and commuters
are willing to tolerate horrible traffic and the resulting poor quality of
life.

Does San Francisco have a good balance now? What if we doubled business and
housing?

~~~
BurningFrog
SF has plenty of money for transportation. It's just used very ineffectively.

~~~
Tempest1981
Citation needed. :-) Is the money used on the wrong things? Or on the right
things, but not efficiently? Many public works projects end up over budget and
behind schedule, so I guess that should be factored in.

Where is the money going, and/or where should it be going?

What % of people who work in San Francisco also live there?

~~~
iiiggglll
San Francisco's budget is vastly less efficient than other comparable US
cities:

[http://www.sfweekly.com/sanfrancisco/the-worst-run-big-
city-...](http://www.sfweekly.com/sanfrancisco/the-worst-run-big-city-in-the-
us/Content?oid=2175354)

As for people living vs. working in SF, this comment does an excellent job
explaining it, with sources:

[https://news.ycombinator.com/item?id=10875936](https://news.ycombinator.com/item?id=10875936)

tl;dr: The increase in population due to daily workers commuting in from
outside is vastly smaller than in NYC.

------
rayiner
> The chart-topping office rents in San Francisco are also a testament to the
> city’s geographic constraints, crammed as it is into 47 square miles at the
> top of a peninsula

It's more of a testament to the city's anti-development attitude. Manhattan
has twice the people with half the land area, _on an island_.

~~~
hellofunk
I don't know what the underlying geography of SF is like, but in case you have
ever wondered why Manhattan is only vertically developed in two areas of the
island where there are tall skylines (with a lot of low-lying areas in
between, i.e. the Village, Chelsea, Chinatown, Little Italy, etc), it is
because those are the only two areas on the island where the bedrock can
support that type of development. I don't know if this factors into SF
development options, but just an FYI.

~~~
coderzach
[http://observer.com/2012/01/uncanny-valley-the-real-
reason-t...](http://observer.com/2012/01/uncanny-valley-the-real-reason-there-
are-no-skyscrapers-in-the-middle-of-manhattan/)

~~~
hellofunk
This is rather interesting. I took a course many years ago at NYU on the
history of the city, and my parent comment was taught to us in the class by
none other than the Dean of the actual school. Fascinating.

~~~
potatolicious
It's an incredibly common urban legend even in the city itself - fortunately
with no basis in reality.

As an example the Metropolitan Life North Building right next to Madison
Square Park was originally designed in the 20s to beat the Empire State for
height (but sadly, the Depression happened), and that plot of land is firmly
on the "soft" ground "unsuitable" for tall skyscrapers.

Not only do we not need the bedrock now, it appears we never needed it - and
the engineers of the early 20th century knew this as well as we do.

~~~
HillaryBriss
Yes. And any tall building in SF's Embarcadero stands in defiance of the need
for bedrock. A lot of the land there is just old, accidental landfill.

Also, I think, but, I'm not sure, that they built this extremely large, heavy
structure right over the bay itself a few years back, something about helping
cars get from Oakland to SF and back. I don't know how much bedrock they found
underneath the supports for that thing, whatever it's called. Can't seem to
remember its name ...

------
hitekker
I have a friend whose parents own three houses in SF.

When I asked about the rapidly increasing cost of rent and how it's driving
people out, he told me, paraphrasing,

"People don't have a right to live in San Francisco."

Another way of saying that you should only live there if you can afford it.

Needless to say, I'm inclined to believe that NIMBY's cannot be reasoned with.

~~~
orangecat
_" People don't have a right to live in San Francisco."_

Which is true, although the flip side is that people shouldn't have the right
to prevent others from building new housing. At least not for reasons like "it
might cause my property value to stop wildly increasing".

~~~
geebee
I can't speak for everyone, and this is just my personal experience. I grew up
in SF, and I haven't seen this sinister quality in people who oppose density.
I disagree with them, I'd like to see SF add more density, but my impression
is that most of the old timers in SF oppose new development because they are
resistant to change and highly suspicious of developers, not because they want
to create shortages and spike the value of their property.

In short, at the extreme, the school teacher or SF state professor who was
able to support a family and buy a 4 bedroom house in the sunset in 1975 wants
the new professor in 2016 to be able to buy a a 4 bedroom house in SF and
support a family, and is unhappy that this is no longer possible.

They also tend to believe, rightly or wrongly, that "density" would just mean
lots of high end expensive apartments that nobody in the "middle class" can
afford. In short (and again, I'm guessing), they are very cynical, perhaps
irrationally so, about what development will do.

There are, of course, some pretty horrendous examples of redevelopment
projects and so forth in SF. I know, you're already reaching for the keyboard
to explain the difference, but you'd be preaching to the choir here. I'm just
trying to explain why it's not really a desire to maximize the value of a real
estate asset that drives so much of opposition to new housing and development.
The whole thing has a very bad reputation in SF.

There is such a thing as YIMBY in San Francisco, often people who have seen
their friends and children priced out.

~~~
tamana
If you are stepping on my toes and refuse to step off, I don't care whether
you are being evil or irrational, you are still perpetuating an injustice

~~~
hitekker
Agreed. Although My friend is a nice guy and his folks are nice people, a lack
of empathy invariably forms the basis of passive cruelty. Not empathy as in
"let's forgive everyone for everything", but "let me honestly consider your
point of view even it may conflict with the way I'm supporting myself". This
is, of course, generally impossible for most people, including myself, since
it takes a great deal of mental and financial security to weather that kind of
introspection.

------
vesinisa
The article links to this report[1] by which SF 1-bedroom housing rents are
also highest in the U.S. It's an interesting report, citing a median rent of
$3,490 for 1-bedroom apartment in SF, but can someone please tell me if this
is price per week, per 2 weeks, per month, or per year? In the UK for example
rents are often cited per week or per 2 weeks, and where I live per month.

[1] [https://www.zumper.com/blog/2016/01/zumper-national-rent-
rep...](https://www.zumper.com/blog/2016/01/zumper-national-rent-report-
january-2016/)

~~~
cangencer
I think UK is only place where rents are advertised as per week, found it very
weird when living there.

~~~
yen223
Rents are listed as per week here in Australia too.

~~~
tajen
As a French citizen, I've always assumed that Oz and US could be culturally
close. Both are young countries with a lot of space, "unlimited" resources and
a need to manage imigration. After living 3 years in Oz, I've noticed it has a
lot of similarities with UK, for example the use of the metric system (or
their schizophrenia about it), the per week/per month rents, the orthograph
and vocabulary ("aluminium";) and down to the awesome simplicity of their tax
forms and tax code. Actually the UK tax code is canonically simple and should
be adopted by the whole world ;)

~~~
esolyt
> I've noticed it has a lot of similarities with UK, for example the use of
> the metric system

I'm not sure why you think this is worth pointing out, considering that
Liberia, Myanmar, and the US are the only countries not using it.

~~~
widdershins
He was referring to our 'schizophrenic' use of it. It's used differently among
generations. Older people use purely imperial, whereas young people use a
confusing mixture. For example, I measure long distances in miles, but short
distances in meters and centimeters! I think of weights and volumes in a
metric way, except when talking about the weight of a person, when I use stone
(not pounds, mind you).

I might be an extreme example, but most people use an imperial-metric melange
of some kind.

------
hijinks
I use to work in the Empire State building. There were stories about from
tenants that in the mid 90's the building was pretty much empty and the rents
per sq/foot of office space was 75% less then an apartment.

So there are stories about people renting office space to live in. They'd also
have a gym membership to use the shower and they'd save a ton of money.

~~~
hitekker
Is that still the case in parts of Manhattan?

I would seriously considering doing this.

~~~
tannhauser23
Have you ever noticed how there are fortune tellers occupying prime
storefronts all over the city? The places with a little chair behind the
window and a thick curtain? I never saw anybody ever go in or out of those
places. I asked a prosecutor friend whether these places are fronts for
prostitution or drugs. Turns out the fortune teller stores are actually being
used as homes for entire families. They cordone off a tiny area for palm-
reading and live in rest of the space. It's a really cheap (and super illegal)
way for a family to live in Manhattan.

~~~
hitekker
Neato. Thanks for the anecdote.

I recall reading from somewhere, probably on HN, that a lot of banks open up
storefronts primarily as a means of shifting money around into different
instruments, not because they actually need or want people to do business at
that banking location.

------
mckoss
For those that are not familiar with commercial rental quotes, they are stated
in units of $/sq ft/year. A good rule of thumb is that you need about 200 sq
ft per worker.

So, at $72/ft, your 10-person startup needs to spend $144,000 annually just
for office space in SF.

~~~
stepanhruda
That's price for a single developer, not that bad.

~~~
asah
um, 10% overhead "not that bad" ?

~~~
lmeyerov
For a small startup, an extra dev or 1-2mo extra runway has way more leverage.
We went with downtown Oakland: cut commute east bay folks, quickly BART
accessible for SF ones, and joys of a good downtown like nice restaurant s &
cafes. When growing, we unanimously decided to stay rather than go to SF.

------
zuck9
For a 1-bedroom in SF, won't it be cheaper to live in a hotel, apartment hotel
or an Airbnb?

~~~
seibelj
Even if that's true, so you really want to move (potentially) every month? And
actually live in a hostel for an entire year? There's more to life than money

~~~
dougmwne
I've considered this carefully. I don't believe that you save money this way
necessarily, but it certainly provides a different experience. This article
covers the ups and downs better than I ever could.

[http://www.nytimes.com/2015/11/29/realestate/our-year-of-
liv...](http://www.nytimes.com/2015/11/29/realestate/our-year-of-living-
airbnb.html)

------
melted
Good. Maybe we'll get "silicon valleys" everywhere else as well when situation
becomes completely untenable.

------
sly_foxx
Why isn't office disrupted by transferring to remote work? You have these
companies that make tools like 'slack', 'asana', 'dropbox' etc. which help you
work remotely and all of them require their employees to be at the office in
the most expensive location in the US.
Programming/customer_support/sales/design/marketing jobs can all be done from
anywhere. What is stopping these startups from going remote?

~~~
gaius
Because it isn't true. Remote work is fine one or two days a week but nothing
beats the bandwidth of a dozen engineers in a room with a whiteboard when it
comes to tackling hard problems.

If you're just making cookie-cutter intranets or shopping carts or something
sure, go 100% remote, but that is not what Silicon Valley is _for_.

~~~
ironchef
Gaius,

Studies are mixed on the pros/cons of office vs remote. For example a Stanford
study showed productivity increased 9 to 13% for remote office workers. Some
have shown that collaboration can increase as well as communication was more
intentional (I don't remember the study offhand).

Anyways, point is it's not all or nothing and the data is still out on
effectiveness and efficiency (I'd think it also depends on the nature of the
work etc)

~~~
geggam
Totally depends on the person IMO... We have one day a week we work from
home... I find myself producing more that day than the rest combined.

Others on the team function differently

~~~
johansch
And on the role.

Compare:

1\. A role which requires very little communication with the rest of team and
quite a lot of long, uninterrupted concentration.

E.g. a developer working a long time on some internally intricate sub-system
which has well-defined interfaces to the rest of the system.

2\. E.g. a UX designer (or perhaps a product manager) who needs to talk to
many people, whose projects shift quickly, whose work affects many other
people's work, etc.

~~~
RyanZAG
UX design of customer facing systems would actually benefit most from remote
work. The UX designer should create a company wide blog (or similar) showing
off the current iteration of the design, along with reasons why each design
element is included.

This is far better than simply talking to many people 1 to 1. It creates a
written history indicating why each design element was chosen. It allows
stakeholders to understand the requirements behind a particularly strange UX
choice and allows them to give suggestions for better UX in a way that takes
those requirements into account. Iteration can be faster as comments can be
taken from all sides at the same time instead of having to seek people out and
set up meetings.

I only see positives for a UX designer given the nature of their work is
highly visual, functional and is cross-organizational. In fact, I think any
company NOT doing UX design this way is probably being inefficient?

------
CrowFly
Having lived in both, I can tell you that Manhattan is much nicer, cleaner,
and safer, with more resources, better food, and better culture. Violent Crime
rate is 2.5x times higher in San Francisco. (Ask Wolfram Alpha)

