Tech Bubble 2.0

Ah, but here we go again

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OPINION We all remember the first dot-com bubble, right? Web technology start-ups flocked to San Francisco in the late 1990s. Thousands of would-be entrepreneurs and techies filled up the city. Gentrification of Central City neighborhoods accelerated sharply. Apartment rents jumped, followed by the condo boom. Demand for commercial office space, especially South of Market, quickly grew red-hot. Rents zoomed, and office developers rushed dozens of proposed new projects forward.

The leaders of Mayor Willie Brown's gutless Planning Department rubber-stamped all they could, and decried the annual limit imposed on their approvals by the 1986 community-activist-sponsored Proposition M ballot measure.

The activists and the mayor put two competing measures on the November 2000 ballot in response. Both lost, but the progressive slate for the Board of Supervisors swept that election, defeating most of the mayor's candidates.

And then Tech Bubble 1.0 popped. The peak year was 2000. The big dot-com bust, 9/11, and finally the Great Recession all followed.

The city's office market crashed. Some new office buildings were foreclosed by their lenders. Many approved office developments went unbuilt. Overall office market vacancies approached 20 percent by 2010.

Ah, but here we go again — Tech Bubble 2.0! A new wave of recent technology industry start-ups — like Twitter and Yelp — are joining the growing survivors of Bubble Number 1 — like Salesforce. And San Francisco has become a premiere national media venue for the tech industry.

Thousands of would-be entrepreneurs and techies are again filling up the city. Apartment rents are going through the roof. Gentrification of Central City neighborhoods is accelerating even faster. Demand for commercial office space, still in SoMa, is red-hot again.

But by 2011 so much vacant space was on the market, and so many approved buildings were waiting for anchor tenants to start construction, that there has been room for them all so far. Several new buildings got underway. Mayor Ed Lee strategically took advantage of this market boom to target economic expansion to the Central Market District, the last disinvested zone of San Francisco's Downtown.

Even today though, city office vacancies still exceed 5 percent. And according to the most recent Planning Department report, more than a dozen already-approved new buildings, totaling more than 4.5 million square feet, are waiting to start construction in the Transbay Transit District, South of Market, and Mission Bay. Another 5 million feet of office space is proposed for more than a dozen more pipeline projects for those areas. Plus another 2.5 million feet is planned for projects on Port property — including the San Francisco Giant's huge project — that are not even on the Planning Department's list yet!

How does this total of 12 million square feet of pending new San Francisco office buildings compare to historic demand? Going back to 1986, the amount of new office space actually built — true long-term market demand through the boom/bust business cycles — averages out to about only 750,000 square feet a year. The city's old-school corporate headquarters dramatically downsized or even moved out of San Francisco — like Chevron and Bank of America — and that's still ongoing. The new tech industry is mostly replacing them. So these 30+ identifiable current projects would provide a 16-year supply of office space at historic rates.

But even in the face of this evident market glut of future office buildings, the usual civic development hypsters are once again muttering about gutting Proposition M, and radically upzoning Soma for even greater office expansion. Is that who City Hall will listen to this time too?

Bubble? What Bubble? [Pop!]

John Elberling is executive director of the Tenants and Owners Development Corporation.

Comments

As long as the "business community" makes policy decisions, the standard of living for the average citizen will continue to decline. The corporations and banks don't care who gets hurt during booms or busts. They make money coming and going.
This seems to make a strong case for the argument: "All property is theft."
Maybe real estate should be nationalized? It's obviously too valuable to be left in the hands of the moneylenders. As are food, education, energy, transportation, healthcare, and the "law."

Posted by TrollKiller on Apr. 03, 2013 @ 8:13 am

wealthy billionaires etc. who generally invest privately or overseas.

No, the majority shareholders of almost all the major US businesses are institutions. That means mutual funds, which are in turn just trustees for assets ultimately owned by millions of ordinary Americans via IRA's and 401K's and annuities and insurance products.

So who owns all those businesses? Not the one percent. But you and me and millions like us.

Your ability to retire depends on all those speculators and moneylenders and derivatives traders and hedge funds.

You are what you hate. An inconvenient truth huh?

Posted by anon on Apr. 03, 2013 @ 8:52 am
Posted by lillipublicans on Apr. 03, 2013 @ 8:54 am

Why bother substantiating anything, huh?

Posted by anon on Apr. 03, 2013 @ 9:29 am

Our dysfunctional economy is proof of the pudding.
No part of MY life depends on hedge fund managers.
Like Tonto said to the Lone Ranger:
"Speak for yourself, Paleface."

Posted by TrollKiller on Apr. 03, 2013 @ 10:50 am

you lack the skills, resources and attitude to succeed in a modern, complex, economic structure. That's inevitable for some, of course, and makes your kneejerk, unqualified remarks at least understandable.

But unless you spend no money, you are supporting hedge funds, who invest in the producers whom you frequent.

Investords and speculators also make the markets more efficient, allowing for better funding of enterprises, which reduce prices for the consumer. They provide you with a job and a home, assuming that you have either of course.

We're all part of the greater system whether you like the idea of that or not. So you might as well be a winner as a loser. And the funny thing is that, when wealth comes you way, so does the influence over events that you so obviously both crave and lack.

Posted by anon on Apr. 03, 2013 @ 10:59 am

History is proving me right, and you wrong.

Posted by TrollKiller on Apr. 03, 2013 @ 11:05 am

the stock market is currently at an all-time high, giving US investors massive gains which are taxed at only 15%?

Oh, and CA real estate that went up by 15% in the last year, leaving SF RE at record levels?

Oh yeah, history is really causing me to suffer. How can I stand it?

Posted by Guest on Apr. 03, 2013 @ 11:17 am

The Fed is printing money faster than the markets can do anything with it, hence the Fed is inflating equities. I thought you all feared inflation?

Posted by marcos on Apr. 11, 2013 @ 6:43 pm

"Investords and speculators also make the markets more efficient, allowing for better funding of enterprises, which reduce prices for the consumer." If this is true, why are American businesses continually being bailed out by the taxpayers?

Posted by TrollKiller on Apr. 03, 2013 @ 11:22 am

you buy did NOT depend on someone willing to risk their capital and take a chance to provide you with something that you want so much that you're willing to pay most or all of your income on it?

But, FWIW, I agree with you that GM and Chrysler should have been allowed to fail. And I prefer the EU solution to the Cypriot banking problem (stiff the larger depositors) than the US idea that nobody should ever lose anything as long as we can tax and borrow.

But then, the EU took a capitalist solution and the US took a socialist solution. You like socialism, right?

Posted by Guest on Apr. 03, 2013 @ 11:32 am

"Investords?"
I like it.....

Posted by TrollKiller on Apr. 03, 2013 @ 4:28 pm
Posted by Guest on Apr. 03, 2013 @ 5:50 pm

But I'm serious!
It's a perfect word to describe today's businessmen.
I can see the headline now:
"Investords Formally Take Over U.S. Government!"

Posted by TrollKiller on Apr. 04, 2013 @ 7:11 am

But seriously, investors and "businessmen" (only men?) are two different categories. Investors provide the funds and then business operators do the work.

If you have an IRA, you're one of those investards whom you allegedly dislike.

Posted by Guest on Apr. 04, 2013 @ 7:25 am

The top one percent and their one-and-a-half percenter wannabes
hold *most* of the wealth in the U.S. in the form of real estate and other tangible assets.

While it might be necessary to reach down to the eighth percentile to get a group that hold most shares here, that little distractionary tidbit has no bearing on the division of financial wealth in the U.S..

Posted by Guest on Apr. 04, 2013 @ 10:59 am

Anyway, a minority of shares are held by individuals. Most share registers are populated mostly by institutions.

Like the mutual fund that your IRA is invested in. Yes, I'm terribly sorry to tell you this, Lilli, but you're a capitalist too.

Posted by Guest on Apr. 04, 2013 @ 11:15 am

Mutual funds? IRA? Are you aware most Americans have no savings of any kind, let alone "investments?" What they have is debt.

Posted by TrollKiller on Apr. 04, 2013 @ 2:40 pm

rather self-serving factoid?

I'd be willing to bet that you have either an IRA, 401K or equivalent.

Or an employer pension plan that is invested on your behalf, like Calpers.

Or an insurance product like life insurance or an annuity.

In each case, that means you're investing in the corporate sector, albeit indirectly

Posted by Guest on Apr. 04, 2013 @ 2:54 pm

You loose.
None of the above.
But again you are changing from the
subject, which is corporate manipulation of the economy
to the detriment of most Americans. Really. No citation necessary,
even Fox News will tell you the economy is in the crapper.

Posted by TrollKiller on Apr. 04, 2013 @ 3:26 pm

organization or employer that you have a connection with has any investments in Wall Street at all?

That's not impossible, but is highly unlikely. You would probably need to have no job or pension plan, no savings, and be very economically inactive.

Posted by Guest on Apr. 04, 2013 @ 3:52 pm

Your concern with my personal life is touching, if a little creepy, but I wish you would stay on message. Corporations, particularly financial institutions, have irreparably damaged the worlds economy, and the average person is paying the price.

Posted by TrollKiller on Apr. 04, 2013 @ 4:09 pm

for your "personal life". I did aver, however, that not many Americans are unconnected with Wall Street. If you have a job, a mortgage, a pension plan, a bank account or an insurance policy, then you are supporting the Street.

It's possible that you studiously avoid any and all of those but, frankly, I don't give a damn either way.

Corporate America does me far more good than a bunch of bearded activists with sandals - that much I know for certain.

Posted by Guest on Apr. 04, 2013 @ 4:27 pm

I know I have won when the Trolls start bragging about their personal wealth.
Of course, the wealthy people I know wouldn't dream of reading the Bay Guardian, so I have my doubts about your claims. Be that as it may, who cares about you? The majority of Americans are suffering at the hands of the moneylenders.

Posted by TrollKiller on Apr. 04, 2013 @ 4:42 pm

Depends what you define as "wealthy", I guess, but at least as i define it, I am not.

All I said is that you'd have to be very economically inactive not to have some connection with or investment in Wall Street, because it's influence is pervasive across our economic system.

Not saying I don't believe you, only that it's harder than you think to be sure.

Posted by anon on Apr. 04, 2013 @ 4:52 pm

Most people in this world live on less than $1 per day.
If you can afford "investments," that means you have far more
than you need to survive; i.e."wealthy."
And to whatever extent my life is impacted by the moneylenders,
it is to my (and the Earth's) detriment, not benefit.

Posted by TrollKiller on Apr. 05, 2013 @ 7:42 am

But when the term is generally used around here, it indicates a significant net worth. Typically, if you wealthy then you will pay the highest rate on income tax, which applies to incomes over 450K per annum. You'll pay capital gains tax at the highest rate, and will pay Estate Tax when you die.

By that standard, I am not "wealthy". Don't try and lay a guilt trip on me just because someone, somehere is starving.

Posted by Guest on Apr. 05, 2013 @ 2:18 pm

If your economic activity is responsible for their starving,
you are guilty, whether you own it or not.

Posted by TrollKiller on Apr. 05, 2013 @ 2:53 pm

They may well starve on their account, though.

Posted by Guest on Apr. 05, 2013 @ 3:19 pm

If you are a taxpayer in the United States,
people are starving and otherwise dying all
over the world on your "account." I'm not sure
where your "confidence" comes from.
Care to explain why you are exempt from the crimes
of "your" country?

Posted by TrollKiller on Apr. 06, 2013 @ 6:50 am
Posted by anon on Apr. 06, 2013 @ 12:49 pm

I see. You live on the Moon, your activities completely separate from every other person on Earth? No man is an island, everything is connected. All of our actions have causes and consequences for all other beings. I suggest that you read something other than Tweets, like a book on history, philosophy, and/or ethics. Then get back to me.

Posted by TrollKiller on Apr. 07, 2013 @ 8:00 am

"But then, the EU took a capitalist solution and the US took a socialist solution. You like socialism, right?" Do you even read what you write?
The stock market is not the US economy; rather it reflects what some rich people believe about a handful of companies, most of which usually turns out
to be wrong for the average investor. Ask the millions of unemployed/underemployed
people or those whose mortgages are underwater how "the economy" is doing.
The EU was doing fine until they started privatization and acting like Nazi's,
and now the whole of Europe is in shambles, except for the Scandinavian countries.
Your insistence that I personally somehow benefit from the shenanigans of the continuing criminal enterprise that is our economy is hilarious. If you only knew.....

Posted by TrollKiller on Apr. 03, 2013 @ 4:21 pm

It's called the Wilshere 5000 index for a reason, and it's constituents employ more than half of all Americans!

Posted by Guest on Apr. 03, 2013 @ 5:49 pm

It's called "The Dow" on the news every night,
and it is composed of 30 companies.

Posted by TrollKiller on Apr. 04, 2013 @ 7:29 am

take much notice of the Dow, not just because it is only 30 companies but because it is arithmetic-weighted rather than cap-weighted.

The S&P 500 and the Wilshire 5000 respectively are used for largecaps and the whole market.

Anyway they are (now) all at all-time highs, give or take a day or two.

Posted by Guest on Apr. 04, 2013 @ 7:37 am

The stock market is not an indicator of the health of the broader economy, it only measures speculation on corporate profit and loss. The stock market is only doing as well as it is because the "free-market" banks were bailed out by the taxpayers.
But you digress. The stock market may be at an all time high (again), but the standard of living for the average person is lower than it was 10 or 20 years ago, and is steadily declining while corporate profits rise.

Posted by TrollKiller on Apr. 04, 2013 @ 9:22 am

It's primarily about providing funding for businesses and providing a mechanism (dividends) for the owners of a business to share it's income.

Liquidity is a key component of the stock market, and that does allow for short-term trading, but that is a secondary finction.

The stock market is generally held to be a leading indicator of the economy, so a good stick market reflects the perception that revenues will grow, meaning more prosperity for Americans.

Posted by Guest on Apr. 04, 2013 @ 9:37 am

prosperity?

The ability to afford living quarters has plunged. Cheap electronics doesn't make the fact that people can't afford a proper home or apartment "okay".

Look at how many people end up without adequate retirement savings. This entire country is fueled by suicidal consumerism. If people wised up and stopped participating, everything would crash.

Nobody is prospering except the people who are exploiting everybody else.

Posted by Guest on Apr. 30, 2013 @ 9:28 pm

You sound as if you are reading from a 5th-grade social studies textbook.
Nothing you have said so far has anything at all to do with my original post,
by which I stand.

Posted by TrollKiller on Apr. 04, 2013 @ 10:16 am

the intelligence required to correctly place and indent a response.

Posted by Guest on Apr. 04, 2013 @ 10:44 am

If the shoe fits, wear it.....

Posted by TrollKiller on Apr. 05, 2013 @ 9:51 am

With apologies to Rod Stewart.

Posted by Guest on Apr. 05, 2013 @ 11:08 am

I always know I've won when the Trolls have to resort to lame insults.
TrollKiller 3, Trolls O.....

Posted by TrollKiller on Apr. 05, 2013 @ 2:50 pm

I just raised the bet. I guess you can dish it out but you can't take it.

Posted by Guest on Apr. 05, 2013 @ 3:18 pm

I apologize to the readers for allowing myself to be distracted.

Posted by TrollKiller on Apr. 06, 2013 @ 6:53 am

This website has numerous bugs aside from the Trollware.

Posted by TrollKiller on Apr. 04, 2013 @ 2:36 pm

Maybe change your browser?

Posted by Guest on Apr. 05, 2013 @ 6:10 am

I get the same misplaced responses and single letter columns whether I use Safari or Firefox.

Posted by TrollKiller on Apr. 05, 2013 @ 8:46 am

Tech bubble boom, then it pops and then after a few years booms again. I have seen this cycle before, new ideas are built, while the old idea become outdated. With all these cell phones and tablets, how would you not have a boom.

Tell you the truth, people tell me about Silicon Valley, they think San Francisco. I tell them "no, San Francisco is not Silicon Valley".

Posted by Garrett on Apr. 10, 2013 @ 10:35 am

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