In Defense of the Urban Freeway

[Pedestrian]

Originally Posted by The North One

Probably because there's absolutely no room in San Francisco for the office space they need. .

Office Market Swings in Tenants’ Favor
By Peter Grant
April 18, 2017 3:53 p.m. ET

The U.S. office market became more tenant-friendly in the first quarter in many big cities as a seven-year expansion slowed.

In San Francisco, vacancy rose for the fourth consecutive quarter amid a surge of new supply, according to real-estate services firm Cushman & Wakefield. A mixed-use development at 181 Fremont St. hasn’t announced any leases for its 432,000 square feet of office space, even though it is scheduled to open later this year.

Asking rents in the Midtown Manhattan neighborhood of New York City, meanwhile, averaged $80.45 a square foot annually in the first quarter, compared with $81.16 at the end of the first quarter in 2016, according to real estate services firm CBRE Group Inc. CBG 0.66% The vacancy rate crept up to 11.9% from 11.6%.

Overall, average asking office rents increased 1.8% between the first quarter of 2016 and 2017, the slowest annual rate of growth since 2011, according to data firm Reis Inc. . . .

(View from U/C Salesforce Tower)

https://www.wsj.com/articles/office-...vor-1492545216

Originally Posted by mhays

Wrong. San Francisco has caps on office space that would have to be repealed. The caps are really low. Additionally, the public can turn a project down by voter initiative.

True, but any unused allowances in one year are rolled over to the next. This means the recent buildng boom is just now catching up with all the unused allowances from 2008-the present. Basically since the "Great Recession" the caps have had no effect but now they are beginning to. There are proposals that will have to compete for an allowance now for the first time in almost a decade.

[Crawford]

Originally Posted by prelude91

Your lack of how enterprise technology companies are run is glaring (Ad Sales?! come on...). I'll give you examples of 3 companies i'm intimately familiar with:

The fact is that almost every major U.S. tech company is HQ in sprawl. I don't need to be an "enterprise technology" expert to understand this. Apple has 25,000 employees in Cupertino. This is for a company that only has 60,000 U.S. employees, half of them working in retail outlets. And they plan on doubling their HQ size, which is insane headcount.

And if you don't think tech firms can have heavy ad sales contingents, then I don't know what to say. Advertising comprises nearly 100% of profits for a Google and that's basically their entire reason for existing.

Originally Posted by prelude91

These are just 3 examples; it's 2017 many people don't need to be geographically located in a specific office, even those leading multi billion dollar companies.

This is all absurdity. If Apple were moving HQ to downtown Chicago tomorrow, no way are you posting that it's irrelevant, and what about decisionmaker Bob Smith in Singapore, and that only enterprise tech experts are allowed to have any insight on company relocation.

This entire thread, like a million previous SSP threads, was mostly bragging about where various companies are HQ, and as soon as it was mentioned that these companies are almost all HQ in sprawl, suddenly it's irrelevant.

[The North One]

I'm well aware of salesforce tower, however, Apple needs enough room to build Versailles. They could certainly do it in the city hypothetically but that requires much difficulty and planning, demolitions, working with NIMBYs, transit and all that nasty good shit and they've got no reason to do so when they can build the (admittedly wasteful and dated) office of their dreams in Cupertino. Seattle has a lot more room currently to build the downtown offices that reflect the real trends, pretty sure Amazon's offices were built entirely on surface parking lots, the only place you could do this in SF would be Mission Bay but even that neighborhood already has plans.

SF isn't Manhattan, this is the same city where even the most basic midrise development is killed constantly.

[Pedestrian]

Originally Posted by The North One

SF isn't Manhattan, this is the same city where even the most basic midrise development is killed constantly.

There are ways: Benioff greases palms almost incessantly, starting when he wanted to create his downtown headquarters trifecta of towers by handing UC San Francisco $100 million for its new hospital. So what's the going rate for real estate carte blanche in Manhattan?

By the way, this kind of philanthropy is pretty rare among the junior moguls of Silicon Valley. Mark Zuckerberg and his wife outdid Benioff with a $600 million gift to UCSF for a "biohub" in the same complex as Benioff's hospital but even that was just the downpayment on $3 billion. But Salesforce's rival, Oracle, is lead by a notoriously self-indulgent cheapskate, Larry Ellison who, to my knowledge, has yet to donate a dime to anything. Even the Apple and Google crowd, including Steve jobs himself, have been pretty tight-fisted. The other Valley philanthropic standout has been the Hewletts and Packards but they are now "old money" by CA standards.

[austlar1]

Originally Posted by Pedestrian

There are ways: Benioff greases palms almost incessantly, starting when he wanted to create his downtown headquarters trifecta of towers by handing UC San Francisco $100 million for its new hospital. So what's the going rate for real estate carte blanche in Manhattan?

By the way, this kind of philanthropy is pretty rare among the junior moguls of Silicon Valley. Mark Zuckerberg and his wife outdid Benioff with a $600 million gift to UCSF for a "biohub" in the same complex as Benioff's hospital but even that was just the downpayment on $3 billion. But Salesforce's rival, Oracle, is lead by a notoriously self-indulgent cheapskate, Larry Ellison who, to my knowledge, has yet to donate a dime to anything. Even the Apple and Google crowd, including Steve jobs himself, have been pretty tight-fisted. The other Valley philanthropic standout has been the Hewletts and Packards but they are now "old money" by CA standards.

Ellison gives some pretty big bucks. Last year he donated $200 million to University of Southern California for a cancer research center. He got Benioff to pony up an additional $20 million. Ellison also funds animal welfare organizations, and he signed the pledge several years ago to give away 95% of his wealth to charitable causes within his lifetime. Tick, Tock, Tick, Tock. He has a lot of geld yet to give away. https://www.forbes.com/sites/karsten.../#2b521b5e3abb

[mhays]

Bill Gates is the world's top philanthropist (based on the edge of Downtown Seattle of course), and his co-founder Paul Allen has given away at least in the high nine figures if not ten figures, also from Downtown Seattle BTW.

It's true that Amazon has been built on largely underused land. And along with various other infill they're the last. Nobody else will be able to plausibly build 12,000,000 sf of offices in a similar walkable radius around here.

[Pedestrian]

Originally Posted by austlar1

Ellison also funds animal welfare organizations, and he signed the pledge several years ago to give away 95% of his wealth to charitable causes within his lifetime.

Have not read he signed that. I assume his many homes and his Hawaiian island will be part of the donation.

[Pedestrian]

Originally Posted by mhays

Bill Gates is the world's top philanthropist

I give his wife (my fellow alum--we are all so very generous ) much of the credit.

But I didn't bring this giving up as a matter of philanthropy so much as that Benioff manages to get buildings he wants built done by handing out money to the right people and causes. It has worked for him to get around NIMBYism, neighborhood activism and political posturing. Gates and his wife's motivations appear purer (not to say Benioff doesn't really want to help the causes he supports).

[prelude91]

Originally Posted by Crawford

The fact is that almost every major U.S. tech company is HQ in sprawl. I don't need to be an "enterprise technology" expert to understand this. Apple has 25,000 employees in Cupertino. This is for a company that only has 60,000 U.S. employees, half of them working in retail outlets. And they plan on doubling their HQ size, which is insane headcount.

And if you don't think tech firms can have heavy ad sales contingents, then I don't know what to say. Advertising comprises nearly 100% of profits for a Google and that's basically their entire reason for existing.


This is all absurdity. If Apple were moving HQ to downtown Chicago tomorrow, no way are you posting that it's irrelevant, and what about decisionmaker Bob Smith in Singapore, and that only enterprise tech experts are allowed to have any insight on company relocation.

This entire thread, like a million previous SSP threads, was mostly bragging about where various companies are HQ, and as soon as it was mentioned that these companies are almost all HQ in sprawl, suddenly it's irrelevant.

I'm not sure what you are arguing. My initial point was that there are many many "tech" companies (which is a very broad term) that have offices in very urban settings, that was my only point.

As for everything else, no two companies are exactly the same, companies like Apple are not really in the Enterprise Space, so don't really need hubs around the world. Their Hubs are essentially retail stores. So in that example, their HQ is of the utmost importance, because I'd wager nearly all of their leadership is there.
Then with companies that are somewhat Enterprise (Google, Facebook, Virtually of all of Ad Tech Companies) they rely much more on "field offices", but you are correct, their product is more advertising based, and thus more of a Agency Sale than a Enterprise Sale, and much less complex.

For True Enterprise Technology/Software Companies, such as Oracle and Salesforce, the HQ is of very little importance for the business, as much of the Sr. Leadership is in the field (ie. Not HQ) where the customers are.

Also, not sure if you meant this to come across this way, but it sounds like you are really downplaying the importance of sales roles at Tech/Software companies. Enterprise Sales Reps, on average, by far the highest paid people in these organizations, and typically make up on of the largest organizations at these companies.

[coyotetrickster]

Originally Posted by Crawford

Why was my statement "wrong"? Nothing you wrote contradicted what I wrote.

Again, why can't Apple move to SF? Why would a "cap on office space" stop Apple from moving there? You think they can't buy an existing building or lease existing space?


Prime SF generally has lower rents and more available space than prime Silicon Valley. I'm pretty sure Apple could afford to house their executives on the moon if they wanted to.

San Francisco has one of the lowest vacancy rates in the country. Its vacancy rate is lower than San Jose's. Apple has a large app development team being built here, and that is an admission that Cupertino is not an easy sell for some of the Millennials is wants to hire. However, Apple prefers it's own domain where they can control access and interactions. The exact opposite of the built environment of SF's Financial District and SOMA.

As for rents, SF outpaces Silicon Valley by many dollars. Only the VC haven on Sand Hill Road commands the same per square foot rents as downtown SF. Otherwise, Silicon Valley sprawl is much cheaper. Additionally, Prop M caps the construction of office space in SF. Large blocks of available corporate footage is much harder to assemble than down on the Peninsula. Google and Facebook stayed in their respective locations because it served them well in their initial growth and there is significant capital investment already in place. That said, both companies have very large development/operational hubs in SF.

[Crawford]

Originally Posted by coyotetrickster

San Francisco has one of the lowest vacancy rates in the country. Its vacancy rate is lower than San Jose's.

Downtown SF has a 10% vacancy rate, which is higher than the vacancy rate in NYC, DC and other prime office markets.

And it doesn't matter. SF could have a 0% vacancy rate and blanket ban on all new construction. That still wouldn't stop anyone from moving corporate honchos to SF. You could sublet existing space, buy buildings, convert space, use temporary space, etc. It isn't that hard. After 9-11 occurred, Lehman Brothers' entire HQ operation (we're talking many thousands of executives) was temporarily run out of hotels.

Originally Posted by coyotetrickster

As for rents, SF outpaces Silicon Valley by many dollars. Only the VC haven on Sand Hill Road commands the same per square foot rents as downtown SF. Otherwise, Silicon Valley sprawl is much cheaper.

I'm acquainted with Palo Alto office rents, and they're considerably higher than downtown SF rents. Prime office space in SV is higher than SF, and the market is generally tighter.

[mhays]

Originally Posted by Crawford

Downtown SF has a 10% vacancy rate, which is higher than the vacancy rate in NYC, DC and other prime office markets.

And it doesn't matter. SF could have a 0% vacancy rate and blanket ban on all new construction. That still wouldn't stop anyone from moving corporate honchos to SF. You could sublet existing space, buy buildings, convert space, use temporary space, etc. It isn't that hard. After 9-11 occurred, Lehman Brothers' entire HQ operation (we're talking many thousands of executives) was temporarily run out of hotels.

Good old Crawford. Your guy-on-the-street ideas of what ought to be true are juuust as valuable as actual knowledge.

[jtown,man]

I live in downtown Norfolk in a highrise(8 stories hehe). I travel almost exclusively on the interstate to work in the burbs 35 minutes away. I do this because I wanted the urban lifestyle and still keep my job.

If they closed down the interstate, my commute would go from around 35 minutes each way to more around 50-1 hour.

Thank God I have it.

[Hamilton]

Originally Posted by Steely Dan

not necessarily.

my cousin lives downtown and reverse commutes via metra up to her job at Discover in riverwoods (lake county) once or twice a week (she telecommutes the other days).

discover runs a shuttle from the lake-cook stop on the MD-N metra line straight to their corporate campus for their metra commuters.

my cousin says that it works pretty well because the shuttle is exclusively timed for metra riders, so if a train is late, the shuttle waits.

I live and work in the NYC area, and I have a similar setup. I reverse commute from an urban neighborhood once or twice a week to a dreary suburban campus in Westchester via MetroNorth and a corporate shuttle.

I tried borrowing a relative's car a couple of times to get there via auto, and despite taking advantage of several of Robert Moses's highway creations, the traffic was so bad that I only saved 15 or 30 minutes at most. And unlike on the train, I couldn't get any work done while driving. Not to mention the stress of driving in heavy traffic.

[austlar1]

Originally Posted by Crawford

The fact is that almost every major U.S. tech company is HQ in sprawl. I don't need to be an "enterprise technology" expert to understand this. Apple has 25,000 employees in Cupertino. This is for a company that only has 60,000 U.S. employees, half of them working in retail outlets. And they plan on doubling their HQ size, which is insane headcount.

And if you don't think tech firms can have heavy ad sales contingents, then I don't know what to say. Advertising comprises nearly 100% of profits for a Google and that's basically their entire reason for existing.


This is all absurdity. If Apple were moving HQ to downtown Chicago tomorrow, no way are you posting that it's irrelevant, and what about decisionmaker Bob Smith in Singapore, and that only enterprise tech experts are allowed to have any insight on company relocation.

This entire thread, like a million previous SSP threads, was mostly bragging about where various companies are HQ, and as soon as it was mentioned that these companies are almost all HQ in sprawl, suddenly it's irrelevant.

Here is what Apple is up to in Austin, and the 6,000 plus local Apple workforce is not all working at the Apple store unless, of course, you are counting the online store which seems to be headquarted in Austin. Apple's chip design team is in Austin and a big part of their hardware engineering team as well. Oh, and they do some manufacturing here too along with customer service, and HR related activities. The picture in the link is NOT the Austin campus, which is housed in much less spectacular digs, but the new Austin campus has over 1,000,000 square feet just the same and another 250,000 Square feet in SW Austin. Most of these activities do not need to take place in a downtown highrise. There is still a need and demand for sprawling suburban office/industrial settings. http://fortune.com/2016/09/01/apple-austin-campus/

[Docere]

Well, I'm glad the Spadina Expressway was never completed in Toronto. Would have ripped through the west-central area of the city, including the Annex and Kensington Market, and the University of Toronto would have been next to an expressway.

West is the more interesting and vibrant direction from the CBD, since there's a nice transition from downtown to neighborhood. I suspect if Spadina Expressway was built it would have that area more like Chicago's Near West Side, which feels cut off from downtown and is a less vibrant and interesting area overall.

[DePaul Bunyan]

Originally Posted by 10023

Interesting. Still seems like it would make more sense for those companies to move downtown.

Not everybody works for private companies. I work with several people at a major regional medical center who reverse commute from downtown or even further away. Nearly 10% of the jobs in this country are healthcare-related. Not everybody or every company is going to want to move downtown either. If you already have a family and go to decent schools that's a significant uprooting, especially if you have a spouse who has a career of their own. For a business that's a huge deal and cost. Not every business has the resources of a Boeing or McDonald's, or the ability to tug on the mayor's sleeve.

[mhays]

Clearly, no location would be perfect for everyone. But downtown will often be highly desirable and a great decision.

In my region, most big architecture firms have always been Downtown. There were two major outliers. One moved Downtown several years ago and the other followed in 2015. They were very clear about why...they want to hire the best people, and being Downtown was key to that.