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,

The Daily Telegraph - Business - - Business - writes James Tit­comb in San Fran­cisco

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

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