The elevator opened to a wide-open office with exposed brick walls, concrete floors, high ceilings, windows overlooking San Francisco’s Second Street, and a half dozen young guys hunched over computers around a shared table.
Austin Allison grinned.
“This looks great; it’s a hip, high-tech vibe,” he said, snapping photos with his iPhone. “It’s open, collaborative space.”
Allison, 26, was seeking a San Francisco base for DotLoop, the technology company he founded in his hometown of Cincinnati three years ago.
He and his wife, Angela Allison, 28, who runs a decorative painting company, plan to relocate to the city this month with their Yorkshire terrier, Paris.
The couple’s move and their quest for living and work space epitomize a modern-day migration being played out continually in the city. San Francisco’s pull as a high-tech hub and cachet as a place to live is drawing growing numbers of entrepreneurs and technology workers who move here from as nearby as Mountain View or as far away as India.
“The Bay Area has one of the most educated and creative workforces anywhere on the planet,” said Gabriel Metcalf, president of the San Francisco Planning and Urban Research Association. “For companies trying to be innovative, the Bay Area is one of the best locations there is. This sets up a ‘virtuous cycle’: The more companies that locate here, the more talent wants to be here, which then improves the attractiveness to more companies.”
Since early 2010, San Francisco’s number of tech sector workers has grown by 13,000, hitting 44,000, according to an analysis of state Employment Development Department data, said Colin Yasukochi, director of research and analysis at CNRE, a commercial real estate firm.
Growing tech hub
In the same time frame, 150 tech firms have set up shop in the city, bringing the total number of such enterprises to 1,850.
Meanwhile, 18 firms from outside the city are seeking office space here.
“We’re seeing the office market explode with an influx of tech companies,” said Donnette Clarens of Cornish Carey Commercial Newmark Knight Frank, DotLoop’s broker.
The Allisons – high school sweethearts – did an initial foray in May, seeking a base for DotLoop and an apartment for themselves, and lost out on some places by not pouncing quickly enough. They returned for two whirlwind days of hunting in late June.
Austin Allison dropped out of his second year of law school in 2009 to found DotLoop, which automates paperwork for real estate agents. Launched with angel capital, the company became profitable in 17 months, he said. In May, to accelerate growth, it took $7 million in funding from Trinity Ventures.
San Francisco is the clear place for that expansion to happen, he said.
“San Francisco has a talent pool that is different and more robust than the talent pool that exists in the Midwest,” he said. “Our office here will become our bleeding-edge tech arm, but our internal operations will stay in Cincinnati.”
He wants to hire 10 to 20 people in San Francisco within the next year. Having an office that projects the right vibe – “fun, cool, energetic, with lots of natural light, high ceilings and an open floor plan” and near amenities and transit – is a key part of recruitment, he said. Another big consideration is flexibility: a space that can grow with the company, or a shorter lease period in case it needs to relocate.
Then there’s price. “We want to be scrappy and prudent, but we don’t want to scrimp by holing up in a cave,” he said.
DotLoop wanted to pay in the mid-$40s per square foot per year. That’s on target with the city’s first-quarter average rent of $46.66 a square foot, as tracked by Jones Lang LaSalle, which notes that rates are up 39 percent from the market bottom in 2010. The firm needs about 2,000 square feet to start.
Austin Allison has a strong preference to be in SoMa, near other up-and-coming tech firms. SoMa’s vacancy rate is 3.8 percent, Jones Lang LaSalle said; it hasn’t been that low since the height of the dot-com boom in 2000.
While incubator spaces offer flexibility, he feels DotLoop is past the startup phase of working cheek by jowl with other nascent companies, just as people outgrow group houses after college.
“We are a real company with products, revenue and customers, not a three-person startup with an idea,” he said. “Our space should reflect that.”
Like other tech folks, he eschews the type of traditional offices inhabited by lawyers and accountants.
That’s spurred an odd trend downtown: Landlords rip out walls and ceilings so Class A offices will look more like old warehouses.
“They are exposing natural brick that’s been sheet-rocked up for years, opening up the ceilings, trying to maximize window lines to get great light,” Clarens said. “It’s all about making it more attractive to creative-user tenants.”
Austin Allison made offers on two offices: A space one floor above the open-floor-plan Second Street office and a cheaper sublet. After two weeks of negotiations, DotLoop signed for the Second Street space, agreeing to a two-year lease on 1,900 square feet in the low $40s. A big plus was a contiguous office that will be available in a year, offering room to grow.
On the housing front, the Allisons were in the lucky position of having a $4,000-a-month budget. At that price range, they didn’t have to deal with cattle-call open houses where dozens of hopefuls jostle for favor with a rental agent.
Still, it was competitive. In May, they were surprised when apartments they toured got snapped up within hours.
The couple’s apartment wish list mirrored that for DotLoop’s office space.
“We’re steeped in that world of lofts with high ceilings and an industrial feel,” Angela said. “Most San Francisco places are older in style; SoMa and South Beach are the only areas with robust modern architecture.”
They decided to boost their monthly budget to $6,000, because a second bedroom to host DotLoop’s Cincinnati employees was a must.
They looked at condos being sublet and apartments for rent in several high-end high-rises: The Infinity near the Ferry Building, the Paramount and the Metropolitan in SoMa.
A converted loft in a smaller building in Mint Plaza appealed to both for its industrial aesthetic – but it had just one bedroom. At the Brannan in South Park, a stunning view of the bay and ATT Park was a draw, but the $6,000-a-month condo’s biggest pluses were that it came fully furnished in a sleek, modern style; had two bed/bath suites separated by the living/dining room; and was near Highway 101 for quick access to SFO.
They decided to go for it and signed a one-year lease.
Not surprisingly, the couple had some sticker shock.
“Our Cincinnati condo is about $350,000; it easily would be $1.5 million out here,” Austin said. “Our Cincinnati office is less than $10 a square foot. It’s extremely competitive out here; the landlord has more leverage to dictate how the game is played.”
Carolyn Said is a San Francisco Chronicle staff writer. E-mail: firstname.lastname@example.org