'I Just Signed A Lease That Made Me Want To Throw Up' - San Francisco Commercial Rents Are Getting Insane
Eventbrite co-founder Julia Hartz tells us she just "signed a lease that made [her] want to throw up."
Hartz says she renewed Eventbrite's lease for triple the rent it was paying two years ago in the same space, a building across from the old San Francisco Chronicle building.
"Thankfully, we're paying that money to the University of the Pacific, so it actually feels like an endowment."
"But it's very hard to stay in San Francisco as a growing tech company," she says.
A study from MPF Research reports that San Francisco had the second fastest rent rate growth in 2013, after Seattle.
San Francisco does not want to lose companies like Eventbrite.
Eventbrite helps event organizers sell and give away tickets. Over 7 years, Eventbrite has helped organizers sell $2 billion worth of tickets. It's on pace to sell a billion dollars worth of tickets this year. It employs 300 people.
Because of its proximity to Silicon Valley, you may think that San Francisco has been a hub of the tech industry for a long time now.
Not true.
The truth is that, beyond a few exceptions like Macromedia, tech companies only really started moving northward from what's known as "the South Bay" during the middle of the last decade.
In 2005, for example, YouTube moved to San Mateo, which is north of Palo Alto and Mountain View, but still about a 25 minute drive from San Francisco.
"That was a big deal," says Kevin Hartz, Julia's co-founder (and husband).
"They'd gone north and were able to find less expensive real estate and draw upon talent from the city and the peninsula."
After YouTube's move, other startups moved even further north.
You've heard of a few of them. Zynga, Dropbox, and Twitter are among the biggest names.
The appeal of San Francisco was that the city itself. Though it has sneakily horrible weather (no summer), it is fairly walkable and cosmopolitan. That attracted talented and young workers. Also, building a startup in the city wasn't that expensive. There were underdeveloped areas where the rent wouldn't turn up the heat too much on your burn rate.
That's changing.