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.

Average rents

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.

Housing budget

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.

Sticker shock

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: csaid@sfchronicle.com

Article source: http://www.sfgate.com/realestate/article/Tech-firms-seeks-perfect-space-in-S-F-3691082.php

“Who has a party in Palo Alto?” she asks the camera, in a dig at the suburban capital of Silicon Valley that helped make the two-minute comedy, “Shit Silicon Valley Says,” a Web hit. For many of the twenty-something engineers and other professionals who play a central role in the latest Internet boom, the question is purely rhetorical.

More than ever, technology entrepreneurs, and their investors and employees, are choosing the urban charms of San Francisco over the sprawl of neighbouring Silicon Valley. In the South of Market district, the nexus of the city’s tech industry, rents are soaring and latte lines are lengthening — conjuring memories of the dot-com bubble of the late 1990s.

Late last year, the city had 34,000 tech jobs, topping the high set at the peak of the dotcom boom in 2001, according to a Jones Lang LaSalle analysis of California Employment Development Department data. Twitter, Salesforce.com, Zynga, Yelp and other sizable Internet companies now call the city home.

Half or more of graduates of the tech incubator Y Combinator, a widely watched Silicon Valley institution, now move to San Francisco, founder Paul Graham said by email. Four years ago, he said, the city lacked the seriousness of purpose that infuses Silicon Valley. “I’m suspicious when startups choose SF,” he wrote at the time. “Things have changed,” he declared recently.

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“This is really where the centre of gravity is,” agreed Y Combinator graduate Dan Siroker. He worked for Google in Mountain View but started his own business, a company that lets businesses test versions of websites, called Optimizely, in San Francisco. And the profitable company just got a round of venture funding.
That’s not to say Silicon Valley, which extends south of the city to San Jose and includes towns such as Palo Alto, Menlo Park and Cupertino, is no longer central to the tech scene.

San Francisco captured 20% of all venture capital funding in the last quarter of 2011, its best showing ever, a report by PricewaterhouseCoopers and the National Venture Capital Association based on Thomson Reuters data noted. Silicon Valley accounted for a strong 27% of all VC investment in the same period.

The new generation of Internet companies has a more real-world, and arguably more urban, outlook. Customers of car service Uber, for instance, see a map of nearby cars on their smartphone app and can call one over in minutes.

Sahil Lavingia, who dropped out of college in Los Angeles to work at Pinterest in Palo Alto, is among those attracted by the city. Last year he left Pinterest and headed north, starting his own online payment service, Gumroad, which lets sellers tweet their wares and bears the design sense that is a hallmark of the San Francisco scene.

“I moved up here for two reasons. One is that Palo Alto is really boring,” the 19-year old chief executive officer said. “For me personally, it’s boring. And two, it’s boring for other people.” To be fair, he says, San Francisco parties are boring, because the people you really want to meet are home working. But the city is international, diverse — and has the people he wants to hire.

There are also plenty of reasons San Francisco is not a great place for business, starting with taxes. Among them is the city’s unusual 1.5% local payroll tax, which the business community views as a jobs killer.

Mayor Ed Lee, last year helped shield companies going public from the brunt of city taxes, and thus narrowly avoided losing Twitter to suburbia. Now he wants to swap a payroll tax for a revenue tax or other alternative.

“It’s all about compromise, and the good news is all of the constituencies are working together,” said Ron Conway, an angel investor known for seeding hundreds of earlystage companies.

Mr. Conway moved back to San Francisco from the Valley eight years ago for personal reasons. His business followed suit — now 60% of the roughly 200 companies his SVAngel portfolio holds are based in the city. Five year ago, three-quarters were in Silicon Valley.

But local progressives — the ultra-liberals who give the city its far-left reputation — have vociferously opposed the tax breaks, arguing that the payroll tax reflects the cost of city services and that newcomers should not be favoured over the people who give San Francisco its character.

The city turned more politically progressive after the “unchecked excesses” of the dot-com boom a decade ago, said Aaron Peskin, a former head of the Board of Supervisors, San Francisco’s city council. “I’m always amazed by human beings’ ability to conveniently repress recent history,” he said.

The last tech boom created jobs — and ill will, he noted. “When you are not taking care of people and families who have lived here for generations and made this the city that it is, it’s a little lopsided.”

Politics aside, high rents could eventually be problematic for businesses, too. Class B offices, including the industrial-looking lofts that tech startups love, currently go for around $43 a square foot and are climbing, Colliers International, a real estate broker said. The square-foot rate is double that in 2003, though still comfortably below the 2001 peak of $65.

Silicon Valley still has major advantages as a location, including wide-open tracts that can accommodate large corporate campuses. “As startups get beyond startup stage and start hiring people, they look to move out of San Francisco,” said Chuck Reed, mayor of Silicon Valley capital San Jose, where Cisco Systems Inc.’s campus stretches along several stops of the city’s lightrail system.

© Thomson Reuters 2012

Article source: http://business.financialpost.com/2012/06/11/startups-flock-to-san-francisco/

The sale was completed Tuesday, said Patrick Barber, head of the San Francisco office of Pacific Union International, the property’s listing brokerage. He declined to name the buyer. The four-level brick house in Pacific Heights has 11,000 square feet of space and panoramic views of San Francisco Bay.

“Homes now are priced realistically, and they’re selling,” Barber said. Nearby properties listed for $40 million to $60 million in the Pacific Heights section known as the Gold Coast never sold, he said. The 1922 mansion sold for 24 percent less than the original listing price of $39 million and below the most recent asking price of $33.9 million.

Home prices in desirable parts of San Francisco and Silicon Valley have defied the U.S. housing slump, buoyed by investors and employees from local tech firms, who sell shares on private exchanges. The unemployment rate in San Francisco’s metropolitan area is 8.7 percent, the lowest in California, according to the state’s Employment Development Department.

A $737,500 transfer tax indicates the sale was the second-highest residential transaction of the year, according to the San Francisco assessor’s office. The most expensive was a nearby Pacific Heights property that recorded a tax payment in August of $825,000, which translates to a $33 million purchase price, based on the assessor’s formula.

The Tudor-style house is located near the Presidio on Broadway near Lyon Street. The property has six bedrooms, five full bathrooms, two half-baths and a landscaped garden overlooking the bay. Other features include a four-car garage, heated pool and spa, and a wine cellar for 3,000 bottles, according to multiple listings service data.

“There was a time when it wasn’t fashionable to spend money, but today the market sees value,” Barber said.

This article appeared on page D – 4 of the San Francisco Chronicle

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/11/03/BUFQ1LPL09.DTL&tsp=1

The sale was completed Tuesday, said Patrick Barber, head of the San Francisco office of Pacific Union International, the property’s listing brokerage. He declined to name the buyer. The four-level brick house in Pacific Heights has 11,000 square feet of space and panoramic views of San Francisco Bay.

“Homes now are priced realistically, and they’re selling,” Barber said. Nearby properties listed for $40 million to $60 million in the Pacific Heights section known as the Gold Coast never sold, he said. The 1922 mansion sold for 24 percent less than the original listing price of $39 million and below the most recent asking price of $33.9 million.

Home prices in desirable parts of San Francisco and Silicon Valley have defied the U.S. housing slump, buoyed by investors and employees from local tech firms, who sell shares on private exchanges. The unemployment rate in San Francisco’s metropolitan area is 8.7 percent, the lowest in California, according to the state’s Employment Development Department.

A $737,500 transfer tax indicates the sale was the second-highest residential transaction of the year, according to the San Francisco assessor’s office. The most expensive was a nearby Pacific Heights property that recorded a tax payment in August of $825,000, which translates to a $33 million purchase price, based on the assessor’s formula.

The Tudor-style house is located near the Presidio on Broadway near Lyon Street. The property has six bedrooms, five full bathrooms, two half-baths and a landscaped garden overlooking the bay. Other features include a four-car garage, heated pool and spa, and a wine cellar for 3,000 bottles, according to multiple listings service data.

“There was a time when it wasn’t fashionable to spend money, but today the market sees value,” Barber said.

This article appeared on page D – 4 of the San Francisco Chronicle

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/11/02/BUFQ1LPL09.DTL

California’s up-and-down economic recovery took another turn for the worse in May as employers shed a net 29,200 jobs from payrolls, a surprisingly large loss following the healthy gains seen earlier this year.

Some of the losses are probably tied to a slowdown in trade with Japan, which is still recovering from a devastating tsunami, and from rising gas prices and other costs that have led employers to put the brakes on hiring, economists said.

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“I see Japan written all over this report,” said Esmael Adibi, an economist at Chapman University.

Cargo passing through the ports of Los Angeles and Long Beach rose just 1% in May, the same month in which employers eliminated 3,600 positions in trade, transportation and utilities.

Construction was another weak spot, shedding 5,000 jobs, as the sour real estate market continued to be a drag on the recovery. Home sales statewide fell 13.3% last month from a year earlier, and home values dropped by 10.4%.

The unemployment rate inched down to 11.7%, according to the state Employment Development Department report released Friday. But analysts saw little to cheer, saying that the decline in the rate probably reflects growing numbers of Californians who have given up the job hunt or who have left to seek work elsewhere. Only Nevada has higher unemployment than California.

The trend mirrors a gloomier outlook nationally, with both employment and economic growth slowing amid higher prices for gasoline and other consumer goods and services.

“This is one more indication of how slow the recovery is proceeding and is likely to proceed,” said Michael Bernick, an attorney who formerly headed the state Employment Development Department. “It also raises a counter-narrative, that there are structural changes and the economy, in certain sectors, needs fewer workers.”

That’s not what Donna Smith, 23, of Salton City wants to hear. She recently completed a certificate program in business management from Everest College, a multi-campus vocational school, but hasn’t had luck finding any work.

“I’m looking for any basic entry-level position, but it’s kind of hard,” she said. “There’s not really much.”

The job losses in May came after the state added an adjusted 14,900 jobs in April, when the unemployment rate was 11.8%, according to the latest EDD figures. The state experienced five straight months of job growth from October through February.

Adibi sounded an optimistic note, saying that the Japanese rebuilding effort will eventually translate into more work in California. He also predicts the state will gain jobs as consumers start spending discretionary income on vacations and on items they’d been holding off on purchasing.

Japan, he added, “is just a hiccup — job creation is going to gain momentum as we go through the year.”

Technology is one bright spot. Tech companies in the Bay Area are on a hiring binge, helping keep the unemployment rate in the San Francisco area to 8.1%.

The San Francisco area added a net 2,600 jobs in May, while the San Jose-Santa Clara statistical area added 2,100. Employment in the information sector has grown 7.1% in just a year.

“It is shocking to me — reading the paper, watching the news, hearing the unemployment reports, hearing house prices continuing to slump — you just don’t see that in the Bay Area,” said Kevin Hartz, chief executive of Eventbrite, an online ticketing company that has hired 32 people so far this quarter. The firm has been forced to recruit engineers from out of state to fill some open positions.

The Bay Area is one of the few regions to consistently gain jobs this year, thanks to the information sector, but most of the state’s unemployed lack the education to work in the newly created jobs.

Prospects aren’t so bright elsewhere. Many of the state’s unemployed workers are trained in industries — such as construction — that have virtually disappeared. Job prospects in retail and trade, meanwhile, have been dimmed by corporate efforts to make do with fewer people, often by having computer programs and machines do jobs that used to require workers.

“Becoming sophisticated, more advanced and computerized may not pay out in additional jobs,” said Johannes Moenius, an economist at the University of Redlands who studies the logistics industry. “It could even mean negative job growth.”

Article source: http://www.latimes.com/business/la-fi-california-jobs-20110618,0,4509354.story