Why no one’s going to San Francisco any more
The tech giants have embraced home working and the city’s financial sector is now a ghost town,
When Adrien Dewulf moved from Paris to San Francisco in 2018, he ended up in a two-bedroom apartment in the city’s gritty Mission district, shared between him and his two co-founders because they could not afford a room each.
It was too small and the electricity would often turn off, and yet the trio would still let out rooms on Airbnb to claw back their rent. “It was a shack,” says Dewulf, who runs Heroes Jobs, which lets people apply for employment with video applications. “I’m gay and they are straight and they would often bring girls home.”
As offices began to close, Dewulf, 26, moved down the west coast to Hollywood. Los Angeles meant cheaper rent, more space, and less fog but, most importantly, culture. “When you come from Europe you are used to having friends who might be artists, reporters or dancers,” Dewulf says. “In San Francisco there are two topics at dinner parties: technology or Burning Man. And if it isn’t Burning Man, it is pre-Burning Man.” The week-long festival, where the entrepreneurs of San Francisco go to find themselves in the Nevada desert, has been cancelled this year.
Dewulf is far from alone. Since coronavirus has shut down meetings, offices and cocktail parties, the hottest topic of conversation in tech’s capital city has been whether to leave.
Tech companies have embraced remote working, finding that they can largely operate without offices. Facebook, Google and Uber have all told staff they can work from home until at least July 2021. Twitter has said remote working will be its new normal. San Francisco’s financial quarter is a ghost town and the main campuses around the city are all shut.
Workers at these companies are now finding that a software engineer’s salary goes a lot further outside San Francisco, which vies with Manhattan for the title of the most expensive major city in the US. Austen Allred, the chief executive of the coding boot camp Lambda School, said last week that his family moved to a bigger
‘The story on Twitter would make you think everyone’s moving to the heart of the country, that’s not what the data shows’
house in the Utah mountains when the pandemic hit, a decision that had saved him $23,000 (£17,400) so far.
The tremendous riches created by the tech boom of the past decade has made the city, which sits on the tip of a peninsula enveloped by the Pacific Ocean and San Francisco Bay, one of the world’s priciest places to live. Hilly topography, a lack of space, and a rush of well-paid tech jobs led house prices to climb 50pc in the past 10 years.
In June last year, an average one-bedroom rented apartment cost $3,750 a month (£2,874), according to listings website Zumper, three times the US average.
Zumper says average rents have fallen by 11pc year-on-year, even as nationally they have crept up slightly. Mountain View and Menlo Park, the Silicon Valley heartland areas south of
San Francisco, home to Google and Facebook respectively, have fallen 16pc. The number of homes on the market in San Francisco is 120pc higher than at the same point last year and at a 10-year seasonal high, according to Sotheby’s.
“If you ask a 28-year-old if they want to live in Mountain View anymore, they probably don’t,” says Anthemos Georgiades, Zumper’s chief executive. “It’s almost entirely about the future of work. If an employer like Facebook says, ‘Hey you don’t need to come back for a year, and by the way you may never need to come back’, that’s accounting for the drop.”
Georgiades says landlords are often offering two to three months of free rent to attract tenants.
Miju Han, 33, director of product management at cyber security company HackerOne, moved to a rural, coastal community a few hours north of the city, with her husband and baby. They originally escaped to visit in-laws but recently had an offer accepted on a house and are planning to stay for much longer.
“The remote benefits for me are all about lifestyle,” she says. “I want to be around my baby son more. I want to smell nature, to hike daily, and to see the ocean from my office.”
“If I can’t gather with my friends and go to events that the city offers for the next year, what’s the point of being in a cramped apartment with tons of people outside?”
Some people believe coronavirus will end San Francisco’s and Silicon Valley’s reign as the beating heart of the world’s tech industry. James Beshara, an entrepreneur and angel investor who moved to San Francisco a decade ago and sold his start-up to Airbnb, says he had been considering leaving for two years but the pandemic led him to commit to the move.
“It went from it being something down the road to signing a lease within five days,” he says. Living in Santa Monica is 20pc cheaper, and Los Angeles has a growing tech sector that includes Snap and Tinder.
San Francisco is already reeling from a slump in tourism. Its famous cable cars have ben put in storage until a vaccine is ready. Losing a significant proportion of tech workers could be more damaging in the long run, with a knock-on effect on the rest of the local economy. More than 40pc of jobs in the accommodation and food service industry have been lost, compared to less than 10pc in finance, IT and professional services, where wages are three to five times higher.
Ted Egan, San Francisco’s chief economist, says he is “not unduly pessimistic” about the techies returning. “I just don’t see that being a permanent change. It’s not like no one could work remotely in the past, and it’s not like businesses didn’t see the advantages of having people come to San Francisco physically to work when it’s possible.
Egan thinks there is still a future for offices. “I don’t think Twitter’s headquarters is going back to being a furniture warehouse,” he says.
Georgiades says Zumper’s data shows that many of those leaving are not moving far, setting up on the other side of the bay in Oakland or Sacramento, with one foot in Yosemite and the other in San Francisco, ready to return to their offices a couple of times a week.
“The narrative on Twitter would make you think everyone’s moving to the heart of the country, that’s not what the data shows. There are people who absolutely have the ambition to move back.”
Dewulf and his two co-founders think they will now work remotely forever, with an “office trip” four times a year to somewhere like Cancun in Mexico, for team bonding. DeWulf ’s San Francisco clique have upped sticks to LA, Austin and Europe.
However, Dan Bladen, the chief executive of wireless charging company Chargifi, who moved from London to Silicon Valley last year, says the pull of the area remains strong. “There is definitely a badge that comes with it. There is a level of respect if you’re in the Valley.”
Zumper’s Georgiades believes that will remain. “I’m pretty confident that the people who leave are going to be replaced. It’s still true that Silicon Valley is the heart of venture capital. For people starting companies, there’s still nowhere better to be.”
San Francisco is one of the most expensive cities to live in the US but with the home working revolution its attractions are beginning to pall