For startup investor Brianne Kimmel, San Francisco now feels unsafe and too far out of the action. After living in the city for seven years, she decamped to Los Angeles this spring.
“Prior to the pandemic the majority of my investments were Bay Area based companies, however now most of those companies are remote-first and new investments have been in NYC, LA, Sydney, and other tech cities,” said Kimmel, 33.
In July, she opened a studio in LA’s Silver Lake neighborhood to host speakers, streetwear and foodie events for the startups her firm, Worklife Ventures, seeds with initial investments as high as $2 million.
“We’re not anti-SF, however with crime rates and restaurant closures, we couldn’t find a neighborhood that would work for the types of programming we offer,” Kimmel said. She recently hosted a pop-up shop with a seller of Chrome Hearts jeans, which she said can cost more than $20,000. “I wouldn’t feel comfortable holding expensive inventory in San Francisco,” she said.
The city has struggled with perceptions of rising crime after high-profile smash-and-grab thefts, even as police data show robberies and assaults at roughly the same level as 2019. It’s stretching even to the wealthiest residents: Hamid Moghadam, the chief executive officer of real estate giant Prologis Inc., was robbed at gunpoint outside his Pacific Heights home in June, an incident he said made him reconsider living and running a company in the city. He co-founded the predecessor to the warehouse owner, which now has a market value of almost $100 billion, in San Francisco in 1983.
He wrote a letter to officials including Mayor London Breed and California Governor Gavin Newsom, saying he is “deeply concerned that our city may be so far down the path toward decline that we may never recover.” City officials took notice of his concerns, Moghadam said in an email to Bloomberg.
“I’m not going to make a relocation decision based on one incident,” he said. “That said, there needs to be the will to fix the city’s problems.”
The Bay Area still leads the U.S. in its share of venture-capital funding, attracting $52.3 billion, or 36% of the U.S. total in VC cash this year through June, according to Pitchbook’s NVCA Data Monitor. New York was a distant second with $19.8 billion, or 14%. And the region is still home to giants such as Apple Inc. and Alphabet Inc., two of the world’s most valuable companies.
“For executives and folks who have ‘made it in tech,’ I don’t believe SF is dead,” Kimmel said. “The broader Bay Area still has the top schools in the country and it’s a great place to raise a family. It’s just expensive.”
This year’s near doubling of mortgage rates makes that priciness all the more difficult for would-be homebuyers. The last time borrowing costs significantly jumped, in late 2018, San Francisco housing prices were buoyed by anticipated initial public offerings, such as Uber Technologies Inc. and Pinterest Inc., that supercharged the local sense of affluence. Now, the IPO market has dried up.
Before interest rates surged this year, San Francisco sellers often listed homes for below market prices, a strategy that fueled ruthless bidding wars. These days, marketing styles and expectations have changed, according to Gallagher, the Coldwell Banker agent.
“Transparent pricing—that’s the new term,” Gallagher said. “That means they’ll take the asking price.”
This article was provided by Bloomberg News.