Most of the rise in commercial rents in SF is related to the non-linear economics of the top tech startups. If your business model is scalable enough (and you're executing properly), the vast amounts of available capital mean that rent is a pretty negligible expense.
The trend we're seeing in the prices of things that software startups need to pay for-- primarily talent and office space-- is that they're also starting to follow a power-law distribution.
I wouldn't be surprised if, in future, the most desirable commercial real estate and the most desirable employees start costing an even larger multiple compared to the median.
I moved to SF 20 years ago and to oakland 5 years ago. The differences are pretty huge. Main thing for me is oakland is the place where people make things. There are lots of cabinet makers, butchers, shipwrights, and suchlike places. Even things that people might associate with sf are sometimes made in oakland, like boccalone meats, or blue bottle coffee. There are loads of hacker spaces and coops, too.
If you want to start a business you could hardly find a better place. Real estate is cheap. Labor is readily available up and down the scale. You can find plenty of janitors, stone masons, or maybe you can even poach employees tired of the commute to Facebook or genentech or yahoo. Transportation costs approximate zero since there is no parking pressure, a subway, a sprawling bus system, and mainline train service, which even sf lacks.
So if you are out to start a business oakland makes sense. If you want to be in the valley scene then of course it makes no sense at all, not being in the valley and all that.
> The city also lacks a cluster of local venture firms that could kick-start investment in hometown companies. And the major players on Sand Hill Road tend to spend in San Francisco's better-established tech scene or in the valley closer to home.
This makes Sand Hill sound extremely insular and provincial -- that it's not enough to be in the Bay Area, you have to be in one of the "right" neighborhoods. That Oakland may as well be Podunk, Flyover State. Is that really true??
There is a feedback loop at play: the entrepreneurs go where the capital is and the capital goes where the entrepreneurs are. The geographical distribution arises organically from that feedback + the initial seed of Stanford University.
It's not that VCs look down at Oakland per se, it's that there aren't many good investments to be found there.
It was briefly touched upon in the article, but would a current Oakland resident care to shed some light on the crime that does occur? Is it mainly focused to a few bad areas, or do you always have to be extra careful when out in public after dark?
I walk 4 miles a day (to and from work) in the city. The crime (of all sorts) is mainly in the really bad areas. 14th and Broadway is a somewhat higher crime area because it's a major bus transfer point (I got this from the crime maps that OPD put out).
Lots of people on the other side of the hills (Concord, Moraga, Walnut Creek) have this idea that Oakland is a really scary place. I think it's partly racial (because of the higher percentage of African Americans here) and partly a PR issue (the 24/7 news cycle only presents sensational items).
I've lived in the area since 2001. I lived in Berkeley for the 13 years prior. I had more problems with crime there, and I was fairly close to campus. People don't normally think of Berkeley as a high crime place, either.
The most dangerous thing I deal with on a daily basis? Cars and bikes. I always cross the street legally, but both cars and bicycles have issues when it comes to respecting pedestrians. I've even seen a police car not yield for a pregnant woman pushing a stroller in a cross walk! He cruised by her within inches. I was dumbfounded. She was in the middle of a 4 lane (2 each way) road.
> Lots of people on the other side of the hills (Concord, Moraga, Walnut Creek) have this idea that Oakland is a really scary place. I think it's partly racial (because of the higher percentage of African Americans here) and partly a PR issue (the 24/7 news cycle only presents sensational items).
Those may each be part of the issue, but I think that a big part of the issue is the actual crime statistics that show that, indeed, Oakland is, in fact, a dangerous place by comparison to those other places.
I mean, there's something about Oakland having a little over 3 times the population but a little under 20 times the number of violent crimes as Concord in 2012 [1].
But all parts of the city are not the same. The very high crime areas, no where near the downtown, are what skews the stats. Downtown Oakland is no less safe than a lot of other cities. Certain parts of Oakland are a lot less safe than the worst parts of many other cities.
So, do you avoid Oakland or avoid the bad parts of Oakland? I, personally, just avoid the bad parts.
<< Lots of people on the other side of the hills (Concord, Moraga, Walnut Creek) have this idea that Oakland is a really scary place. I think it's partly racial (because of the higher percentage of African Americans here) and partly a PR issue (the 24/7 news cycle only presents sensational items) >>
Lots of people have the idea that there is a lot of violent crime in Oakland because, well, there is a lot of violent crime in Oakland. No need to bring race into it.
I think a big issue is that Oakland is way bigger than people think, especially geographically - it covers more land than SF - and there's a lot of diversity. Some regions are really bad. Some regions are ritzy. There's plenty of everything between. But the news doesn't differentiate well between the different parts of Oakland, so when you hear over and over that there was crime in Oakland and you're sufficiently unfamiliar with it that your model has it as an undifferentiated blob, and you think that blob is smaller than it is, of course you think anything about Oakland is scary.
Yep, it's all about drawing lines around things. Piedmont has little crime, but it's encircled by Oakland. Should it just be lumped in with Oakland statistically?
Speaking of which, when I get around to running for mayor of Oakland, I'm going to have only 2 planks:
1) Charging the people of Piedmont $50 to drive out of Piedmont.
2) Divesting "Oakland" of almost all of its real estate, while retaining all of its civic debts, then letting the remnant entity of "Oakland" just go bankrupt.
I think this is going to be a very popular platform!
Ethnic demographics and crime rates are correlated, so it would be a mistake to dismiss concerns over crime in an area as a "race thing". People may have legitimate concerns about an area not necessarily driven by racial animus in Oakland, Baltimore, Detroit, DC, Atlanta, and etc.
Because of the correlation between crime and demographics, it might be tempting to publicly call out concerns about high crime neighborhoods as examples of racism, but I still wouldn't check your iPhone on the street at night in Oakland.
I regularly check my phone on the street at night in Oakland and have had precisely zero issues. Of course, I'm also large and male and in one of the nicer areas of Oakland, and I still make a point to keep my head about me (it's a city...).
For your one mention of race in 200 words -- expect a flood of responses either chastising you for unnecessarily bringing up race politics, or letting you know that it's actually just fine for it to be about race.
I lived in Oakland briefly. I can't speak to Oakland crime broadly, but I will say one of the big drivers of crime is gangs. In Baltimore city where I grew up, the crime is drug related so shootings are targeted and don't have collateral damage. In Oakland, the gang-related shootings tend to be spray-and-pray with innocent bystanders getting caught in the middle. I moved out of Oakland after one such shooting happened < 100ft from my nice $2k a month apartment.
I live near 19th Street BART, and honestly I feel safer after dark in downtown Oakland than I do any time after 8 PM around the Powell Street station. I usually go for a run after sunset around Lake Merritt and there have only been a handful of occasions where I felt uncomfortable.
The other night I saw a young woman walking by the lake at 10 PM while talking on her iPhone -- and that seems normal for me as a newcomer, but my wife grew up in Oakland and tells stories from the 90's when it wasn't smart to park your car by Lake Merritt in the middle of the day on a weekend, let alone go for a walk by yourself at night with your phone out.
What I don't understand is given the skyrocketing real estate prices in San Francisco, versus the much cheaper and undeveloped density that the BART corridor could support in Oakland, why more high-density residential isn't springing up on this side of the bay.
Shoot me an email (davidleothomas@gmail.com) or hit me on IRC (davidthomas on freenode - typically lurking in #haskell, #snowdrift, and a couple other random channels).
You can walk around downtown/Uptown at dark. The crime, especially murder, is not spread evenly around the city. There are neighborhoods that experience flash points quite often -- as is the case in most cities.
Oakland, for reasons unique to Oakland, did not benefit from the move-back-to-downtown movement of the 90s-on that turned around city cores like Chicago. Still, Oakland's downtown is so small and geographically special that another strong wave of residential building will turn it around quicker than other cities. I'd argue we are already witnessing the run...
Resident here. If you live or work here, I think the best advice is to not be naive. Trust your instincts. Don't assume that a transitional neighborhood (where the houses are quaint but well-kept) is safe. Don't walk around with your iPhone out if you see other people watching you, etc. Living in Oakland can have its attractions, but if you're at the wrong place at the wrong time, you might be ganked, so keep tabs on your surroundings.
I've lived in Oakland for ~8 months and I'm yet to be in a situation where I felt at risk (disclaimer: I'm a reasonably tall man and rarely feel at risk in cities). I live north of Lake Merrit, work in Jack London Square, and deliver bagels up and down Broadway and Telegraph on my bike. Primarily traversing that terrain, I feel very safe.
That said, there are other parts of the city that are much more dangerous. I generally put these in two categories: (1) neighborhoods with a high concentration of crimes like robberies and (2) neighborhoods where gang-related violence occurs. (2) is very often a subset of (1).
I'm not an expert, but from my understanding, (2) areas are heavily concentrated in East Oakland (east of Park Blvd), so if you generally don't traverse that part of the city, you avoid much of that danger.
One thing people fail to appreciate is that Oakland is geographically enormous. You can live here for years and fail to visit the majority of it, as I have. It's unfortunate that there's a lot of parts not worth visiting. Some parts are just brownfield industrial relics, some are just endless housing.
But you can say the same thing about SF. I doubt for example that when people talk about the hot SF real estate market they are referring to the Excelsior. If you center yourself on the SoMA area in SF, many parts of Oakland are closer to it, in terms of travel time, than most of SF. It could take you an hour to get to 1st and Folsom from 48th Ave & Noriega in SF. But you can get there in ten minutes from West Oakland.
I live at The Grand, which is close to Broadway and Grand. In the last 6 months, I have heard one purse snatched and one assault and carjacking. Both happened in broad daylight, in heavily trafficked areas with people around. I was unable to assist OPD with the former case, but for the latter I ran down to give a statement. OPD never caught them last I heard, the car hasn't been recovered, and an elderly couple was very shaken.
However, I personally have never been the victim of a crime.
So the biggest issue I see right now with Oakland is that it really suffers from a lack of decent or desirable office space.
I'm currently 15 months into an SF lease for my company and when I originally looked for space I spent a lot of time looking in Oakland thinking I'd get a lot greater value. Unfortunately I found only one nice "SOMA style" space in Oakland it was right on the edge of Chinatown in an area I'm not sure I'd want female employees walking to BART late at night.
Honestly there's a huge opportunity here for some developers to look at building out some nicer office spaces in Oldtown, Jack London or the Grand/Broadway area near 19th St BART. I don't mean stuff thats gorgeous just something slightly contemporary would be an upgrade.
The crime problem is overstated. While it appear high on a per capita basis, cities are dynamic. The cancers that plague the city will be forced out of downtown and Jack London once business activity picks up, because that will coincide with an increased presence on the street of people doing things as well as more police (the force is less than half of what is needed).
Oakland has this very unique history of activism that really scares people into not investing here and even that is changing -- for the better.
Funny thing about $1,000/SF apartments in the city though...people start to re-evaluate their options. Even if you do not move your office space to Oakland, you can't beat the 15 min commute from downtown Oakland into the "city". Oakland will never really rival SF but it does not have to. Today, without much of a tech scene, Oakland has many attributes (big city amenities with a small town feel) that allow it to trump the city, including better weather.
I will go on record by saying that Oakland (core, around lake, downtown, Jake London, Uptown, etc) will become one of the most desirable place to live in the Bay Area within the next 10 years.
I want to clarify, the crime thing isn't the main thrust of my argument. Its an issue but not the one I'm addressing. My point is that a lot of the actual physical spaces I saw were outdated offices or Office Space style cube farms.
Are Oakland's problems mostly caused by low per-capita tax revenues or by inefficient city government? If it's just a matter of cash, that will change quickly. If the government culture is broken, that can take much longer to fix.
I'd say the latter because Oakland experienced a significant windfall in real estate transfer taxes prior to the real estate crash, and it was all squandered by Ron Dellums[1] and cronies.
The current government are hardly better. Mayor Quan is a semi-literate career politician. Her ideas are basically terrible and stupid.
1: True fact: I couldn't remember his name so I just googled "dipshit mayor of oakland" and his name popped up #1.
I only know a few. There's the civil rights attorney who was on Quan's staff. That's two negatives for me; trying to be nice to everybody at once is how Quan got into a quagmire with Occupy Oakland. Seigel refers to the space in front of city hall as "Oscar Grant Plaza" which puts him firmly in the moron column on my ticket.
I know Schaaf, who represents my district. I don't really like her policies because they represent the clueless barely-affluent people up in the hills. Anti-tax and tough-on-crime on the same ticket? Schaaf has that ticket. It doesn't make sense. She's also been active in trying to rollback pedestrian improvements and bike lanes in favor of a handful of parking spaces which reinforces my image of her as a bit clueless.
I guess technically Quan is also running again. Heh.
In the abstract I like the notion of someone who's been City Auditor at the helm, but don't have strong feelings about Ruby in particular. Probably weakly prefer Seigel to Quan but that's not saying much. Schaaf doesn't seem awful. In general I need to dig deeper.
I think there's some decent 1970s style office space in places around 20th/Broadway -- where Pandora, Kaiser Center, etc. are. I personally prefer mostly-private-offices, with some project spaces, to the "SOMA style" warehouses open plan offices. I haven't looked in a year or two (if I were getting office space, it'd be R&D/lab/light industrial plus office space, and I'd be fine with a bad area and a big fence/gated parking/armed guard).
There is a lot of stuff just on the other side of 980 at Grand, too, but that's approaching warzone status unfortunately. It's weird when a Taco Bell and a pot dispensary gentrify an area (the east side of 980).
I live and work in Oakland. My office is 3 blocks from 19th street BART in the heart of uptown. There is so much incredible development happening in this part of the city. The Hive project launches later this year (The Hub is already open in the space) with awesome new apartments, and amazing new food options. From Lake Merritt to Jack London Sq. to Rockridge to Montclair there are a wide range of options to consider for office / living space. Its also typically ~10 degrees warmer then SF. If you have any questions feel free to ask and I'll answer when I get back this afternoon.
I recenty looked at an amazing house on an amazing street, but opted against it because the adjacent area was far too ghetto and, even though that street (in maxwell park) seemed wonderful - the surrounding area off high street would make bikeing or walking to a store or bart unpleasant.
Where i want to see startup spaces is on the old naval base in alameda.
EDIT: apparenty saying you dont like oakland is an unpopular opinion to have ;)
Well, for those talking about it, please come check out alameda - its the best city in mediate vicinity to SF, IMO.
1) That is pretty far from downtown and 2) that's a horrible area. There are many areas close to downtown Oakland which are nicer. Lake Merrit. Rockridge. Just to name two.
Alameda has piss poor public transit connecting it to Oakland. Plus the opposite side of the Oakland Estuary is Fruitvale, not exactly one of the more desireable areas to live in.
Yeah, that's really representative of Oakland. Cripes. You've shown something pretty far away from downtown, which is what the discussion is all about.
I'm getting hella downvoted because the tech scene in the Bay Area can't appreciate the various strata of culture that surrounds them. Since they're afraid of it they group it all together as "gang culture" which is a myopic viewpoint. It's Oakland culture not gang culture it just so happens that a subset of Oakland culture interpenetrates gang culture.
That is the irony of progressive thinking: they are constantly torn between saying "Black people don't really do X" and "X is completely fine, people just look down on it because of racism".
In this case, X = "driving a car around in circles" or "a vibrant and expressive form of performance art", depending on what kind of progressive you are :)
Why are you assuming the side shows in the video are gang-related? All I see is a bunch of guys -- actually remarkably multiracial, exactly the opposite of what a gang scene would look like -- enjoying car stunts. It's pretty awesome AFAICT.
Because that area is so gang infested that OPD ignores large swaths of it. Any other neighborhood that closed down the street for that type of "fun" would have OPD swarming on them in a few minutes. Not this one.
1. Do you think the people living in that house in the background appreciate that?
2. All I can think of watching that guy on the motorcycle sans helmet at the end is his brains splattered over the pavement.
The trend we're seeing in the prices of things that software startups need to pay for-- primarily talent and office space-- is that they're also starting to follow a power-law distribution.
I wouldn't be surprised if, in future, the most desirable commercial real estate and the most desirable employees start costing an even larger multiple compared to the median.