by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The latest Bloomberg Businessweek documents an unintended consequence of San Francisco’s tightly regulated housing market, one that should surprise no one who has studied the history of the city by the bay.
San Francisco is a boomtown with an unemployment rate among the lowest in the country, as Google (GOOG), Uber, Airbnb, and a seemingly endless array of startups snap up massive amounts of office space. But just as an influx of programmers with six-figure salaries has pushed residential rents higher than many of the city’s longtime citizens can afford, skyrocketing commercial leases threaten the groups providing the social safety net that thousands rely on. A city report from October of last year showed that close to 2,000 nonprofits in San Francisco, almost one-quarter of the total, had to move out of town or shut down from 2011 through 2013. Those forced to find cheaper digs include not only organizations offering services such as alcohol counseling and in-home care, but also those focused on affordable housing, environmental preservation, and discrimination. “We’re all being displaced,” Nielsen says.
The cost of San Francisco office space has more than doubled since 2009 and by next year will eclipse Manhattan as the highest in the country, according to commercial real estate brokerage CBRE Group (CBG). The area around Market Street where Lutheran Social Services was uprooted has been a flash point; once packed with city-funded social-services organizations, it’s now home to many tech companies that have received tax breaks and other incentives to move in. …
… The Center on Race, Poverty & the Environment, a legal-services nonprofit, moved across the bay to Oakland in May after its rent rose 50 percent, to $9,000 a month. Transgender Law Center, which provides legal aid in discrimination cases, did the same after its rent doubled. Bridge Housing, a nonprofit that manages affordable-housing projects, had to move elsewhere in San Francisco after Google bought its building. In-Home Supportive Services Consortium, which provides care for the poor and elderly, now operates out of a remodeled basement because a clause in its old lease let its building’s new owner evict tenants upon taking over.
Left unexamined in the magazine article is the primary cause of skyrocketing housing and real-estate prices: San Francisco’s strict development limits.