- Denia Breaux Receives Meritus Scholarship from Zephyr Real Estate
- Sick of San Francisco? Seattle tops NYC as favorite expansion market for Bay Area tech companies
- I’ve lived in the Bay Area for 30 years, and I’m convinced that tech companies have ruined it
- Flooding could claim thousands of Bay Area homes, say climate scientists
- Zillow Data Used To Project Impact Of Sea Level Rise On Real Estate
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Homes Millbrae Pages
When tech companies from the San Francisco area look to grow outside their backyard, Seattle is the most common landing spot, a new report finds.
According to research from real estate firm CBRE, Bay Area companies have taken 3.5 million square feet of office space in the Seattle region over the last five years, barely edging out New York City as the top expansion market. Other popular landing spots include Southern California, Boston, Austin, Chicago and Portland.
It’s not just San Francisco companies that covet these markets. Of the nine non-Seattle markets in this top 10, seven of them are finalists for Amazon’s HQ2. Only Portland and Phoenix didn’t make the cut.
GeekWire tracks the number of out-of-town tech companies that have opened up engineering offices in the Seattle area, and the figure now stands at more than 100. San Francisco companies are well-represented on that list.
Still, these companies don’t measure up to Seattle’s homegrown tech giants in terms of their real estate footprint. In its HQ2 announcement, Amazon said it occupied 8.1 million square feet of office space in Seattle, but GeekWire research found with future plans and commitments its footprint could grow to 13.5 million square feet. Microsoft over in Redmond, Wash. has a massive, sprawling campus of approximately 15 million square feet spread across 125 buildings.
Companies are attracted to Seattle because of its highly educated population and huge pool of tech talent. Despite being the long-running hottest housing market in the nation, Seattle is still a cheaper place to live than San Francisco.
CBRE’s research backs up other findings about the growing San Francisco to Seattle connection. A year ago, LinkedIn found that Seattle has gained the most workers from San Francisco. Redfin found that wanderlusting Bay Area residents frequently look to Seattle when looking to escape their current situation.
I did a very informal survey of friends and neighbors, including people who work in tech, on the industry’s role in the Bay Area. The first thing everyone mentioned was housing prices.
A myriad of factors have pushed up the price of Bay Area real estate, and a Starbucks salary can’t compete with a tech paycheck in a when it comes to the competitive rental market. And forget about buying a home: the median San Francisco home price is $1.61 million, according to Curbed.
A friend of mine once commented that San Francisco is a city of rich people with no one to pour their lattes. Many people, including me, have decamped to the cheaper East Bay or places further afield.
Even lovely, funky, spirited Oakland is not immune to the housing crunch. As San Francisco has grown more crowded and unaffordable, a flood of tech workers has brought high prices to Oakland buyers and renters as well, according to Zillow.
The Bay Area is no longer a place where a young person can live a bohemian life rich in ideas but short on cash. If this housing trend keeps up, young poets will no longer congregate at City Lights Books or split a tiramisu at Caffe Greco. And that’s a loss for the Bay Area.
Although the phrase “my home is underwater” is never good news, in the near future it may take on even more dire ramifications for coastal communities, including those in the larger Bay Area.
On Tuesday the Union of Concerned Scientists [UCS]—a non-profit science advocacy group that lobbies for policy to circumvent potential environmental disasters—released a 28-page study reviewing the possible dangers of sea level rise to coastal real estate markets.
The product of several UCS climate scientists and analysts, the paper titled “Underwater: Rising Seas, Chronic Floods, and the Implications for U.S. Coastal Real Estate” proposes that potential sea level rise over the next 30 to 80 years could render valuable waterfront real estate worthless, with losses in the U.S. exceeding $1 trillion in the worst case scenario.
Although San Francisco is actually spared the worst of it in the UCS analysis, the rest of the Bay Area isn’t so lucky. Some takeaways:
- Market activity reveals that Americans are not really taking flood risk seriously: “Hundreds of thousands of buildings lie in the path of rising seas. [...] Yet property values in most coastal real estate markets do not currently reflect this risk. And most homeowners, communities, and investors are not aware of the financial losses they may soon face.”
- The biggest risk may not be just to homeowners and coastal communities but to the larger economy: “The consequences of rising seas will strain many coastal real estate markets—abruptly or gradually, but some eventually to the point of collapse—with potential reverberations throughout the national economy. And with the inevitability of ever-higher seas, these are not devaluations from which damaged real estate markets will recover.”
- Although the problem is only barely visible now, there’s a short period in which to act: “Sea level rise are growing and risk perceptions in the marketplace can shift abruptly, both of which leave communities vulnerable to economic hardships that many will not be able to cope with on their own. [...] The cliff ’s edge of a real estate market deflation due to flooding and sea level rise is already visible for many communities if they choose to look.”
- In the Bay Area, thousands of properties risk being flooded out in the next 30 years—none of which are in SF: “San Francisco itself has just 270 at-risk homes in 2045. [But] in the nine counties surrounding the San Francisco Bay roughly 13,000 properties—home to more than 33,000 people and valued at $8.6 billion today—are at risk.”
- Potential damage and loss of value will not fall equally on all Americans: “Communities with fewer resources to start with, or that are otherwise disadvantaged, will likely be most heavily affected by chronic flooding and its accompanying financial losses,” including communities with higher poverty rates and higher populations of “traditionally underserved groups—African Americans, Hispanic Americans, and tribal communities.”
A few caveats: UCS based estimates about properties and home values on present-day Zillow data.
Obviously by 2045 there will be more homes and much different property values in the Bay Area and other coastal regions, but the research doesn’t try to speculate about what those may be.
Notably, this means that waterfront developments in places like Mission Bay and Treasure Island are also not accounted for in the future projections.
Note also that the flood risks presented in the paper are based on “a scenario that results in 6.6 feet of global sea level rise by 2100.”
No one actually knows for sure at what rate sea levels may rise over the next century—because nobody can see the future, of course—and possible scenarios with a slower rate of ocean encroachment would presumably result in smaller losses.
Then again, homeowners shouldn’t ignore the possibility of even more drastic ocean conditions than those used in these projections either. Risk and uncertainty go hand in hand when it comes to the coastline of the future.
You can read the full report here.
STEVE INSKEEP, HOST:
It’s a good time to be living on high ground. Not such a good time to be living down near the water. A study out today says more than 300,000 homes in the United States are likely to see chronic flooding within the next 30 years because of sea level rise and climate change. This could cause a crisis for the housing market in some areas. NPR’s Greg Allen reports.
GREG ALLEN, BYLINE: There are many communities around the country already seeing increased flooding as a result of seasonal high tides and storm events. In Bonita Springs, on Florida’s Gulf Coast, homeowner Laurie Malone (ph) was shocked by the amount of water that came into her home during last year’s Hurricane Irma.
LAURIE MALONE: I expected some, but not up to here. You can see the water line right here.
ALLEN: That’s about 2 feet high, I guess.
MALONE: And the whole staircase was, like, this thick of just green mold.
ALLEN: A new study by the Union of Concerned Scientists says in Malone’s neighborhood, nearly 300 homes may begin experiencing regular flooding because of climate change. Bonita Springs isn’t alone. Nationwide, residential and commercial properties valued at nearly $140 billion are at risk from the impact of sea level rise. Rachel Cleetus is with the Union of Concerned Scientists.
RACHEL CLEETUS: They start to see worsening chronic inundation, the sort of frequent high-tide flooding that’s worsened by sea level rise, and it’s very disruptive to daily life, to economies. And what we’ve found through our research is it’s a real threat to coastal real estate.
ALLEN: Real estate in 22 states and the District of Columbia. Working with the online real estate company Zillow, the Union of Concerned Scientists examined sea level rise projections in hundreds of communities from Washington State to Maine. Not surprisingly, Florida is the state most at risk, with some 64,000 homes likely seeing chronic flooding by 2045. New Jersey, though, isn’t far behind. Other at-risk areas include New York’s Long Island, where $8 billion worth of coastal real estate may see flooding. Also, the San Francisco Bay Area, coastal Louisiana, the Eastern Shore of Maryland and beach communities from Texas to Massachusetts. With chronic flooding, Cleetus says, coastal areas are likely to see real estate values collapse. And, she says, they may not come back.
CLEETUS: Unlike previous market crashes where home values eventually tend to rebound, in this case, mortgages unfortunately will only tend to go further underwater.
ALLEN: That’s figuratively and literally. In a separate study published earlier this year, Jesse Keenan of Harvard’s Graduate School of Design found evidence increased flooding is already beginning to affect the sale prices of homes in some parts of Miami. This new report, he says, should alert people that climate change is not just a problem for future generations.
JESSE KEENAN: We’re talking in this study about a 30-year time horizon, which is the amount of time that most people get a mortgage. So if you’re going to buy a house today, and you’re going to get a mortgage today and you’re going to be anticipating paying that off in 30 years, this is what’s at risk.
ALLEN: The study’s authors are calling on policymakers to take action now on climate change. Strong measures to cut carbon emissions, they say, could head off the worst-case projections and limit the impact of sea level rise on vulnerable coastal areas. Greg Allen, NPR News, Miami.
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