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Bay Area Research Rant: Metaphysical Musings on the Urban Land Institute

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By Garrick Brown, Vice President, Research – West Region

We are born alone. We die alone. And ultimately we live alone.

If we are lucky, we find ways to avoid Connectionsthose facts. If we are lucky, we are able to fill our days with the illusion of communion with others. If we’re really lucky, we actually do fill the dark swirling void of existence with relationships that actually do matter to us and that don’t turn out to just be fleeting. Yes, if we are really, really lucky we somehow manage to find some sort of semblance of meaning through our connections with others, through these relationships… all the while obscuring the true solitary nature of our existence… the fact that in the cage of your own skull you are, and always will be, utterly alone.

I am convinced that it is because of the solitary nature of our existence that perhaps the most exciting human experience is that of the new connection. I’ve met tech giants who have told me that the night they met their spouse was still more exciting to them than the day they became millionaires, hundred millionaires, billionaires… you name it. I am convinced that there is nothing so filled with the spark of life… of the sense of intrinsic meaning… as when we meet those people with whom we establish instant connections that cannot simply be explained away by mere “things in common.”

There is nothing like meeting someone who, without ever having met us, opens their mouth and gives voice to our innermost thoughts. Which is exactly what happened to me last week while at the Urban Land Institute’s Fall Meeting in San Francisco last week! I had been contacted by some friends in the various influential councils there to speak. It kind of got out of hand. As I started to work with the groups, their need for specific content became clear… so I did basically end up giving two speeches that were very close to each other and two others that were off on their own.

I am just going to start by saying that all of my Bay Area-themed presentations had the common thread of discussing the rising cost of living as a threat to the ongoing economic boom. And my views and my topics were not correlated or shared with anyone from ULI before this event, other than via anyone over there that subscribes (you can access them all below)…

Urban Development Mixed Use Council (UDMUC Gold): Overview of the San Francisco Bay Area Market

Office Development Council (ODC): How Hot is Too Hot?

Commercial & Retail Development Council (CRC Silver): Tenants, Tenants, Tenants

Industrial & Office Park Development Council (IOPC Red): The Rent is Too Damn High; Cost of Living in the Bay Area

…..and I will admit in one or two of the groups where I brought this up, I got some heavy questions. Which is great—because people shouldn’t just be blindly accepting whatever any economist or analyst says. I know of a guy or two that has been consistently wrong for the past 2.5 years in predicting a tech bubble/crash that if you really listened to him… well, you would have lost a lot of money. He still speaks at every other major event, but who cares… you’re not keeping score, are you? You probably don’t even remember me save for the glasses, bow tie and probably inappropriate humor.

But let me get back to the important stuff… I am fielding these great, tough questions all day long. And after four hours of speaking I am beat. My voice is going. I’m dead tired. And I am even wondering if anyone really got my message. I was sitting there in the solitude of the crowded Hotel InterContinental Bar having a beer after a rough day when this e-mail comes through with the latest ULI Report; The Rise of the 18 Hour City. And then I read this additional digest and hear about the release of another report: “Bay Area at Risk of Losing Millennials Due to Housing Costs…”

I immediately set upon the report like a rabid dog. I was only halfway through my first Stella… so the drunken rapture that overcame me as I devoured the words on my screen clearly had nothing to do with mere, cheap intoxication. I couldn’t put my way-too-big-old-fart-model of iPhone down even as young real estate hustlers tried to shove me aside to get a crack at the bartender. This was it… This was true love. I looked up and saw this superhot, pot-bellied, poufy hair, baggy eyed, coke bottle glass middle age specimen of desire… Oh wait… that was me in the mirror. But these cats at ULI Terwilliger Center for Housing and the ULI Building Healthy Places Initiative put together a hell of a great report. It was great to see colleagues out there seeing exactly what I have been seeing for a while and for all of that mutual validation.

But all of those threats I have been talking about here and in my presentations as of the last few months actually have a new chapter beginning… We talked about the Uber Oakland deal last week. Talk about moving fast… the most important new development project under way in the Bay Area is now Shorenstein’s 601 City Center in downtown Oakland. Yeah, you heard me…

This project is huge because the floodgates are about to open for Oakland when it comes to tech demand. This pressure valve is critical… it will alleviate San Francisco rents both for office and housing and potentially give us something we aren’t used to seeing… soft landings. But, that is after probably prolonging our growth cycle… the only problem is that there is not a lot of modern office space in Oakland. This is the first project looking to step up and serve that demand. And there will be plenty of it… So the transformation of Oakland is now in full swing. A couple of years ago I said Oakland is the new Brooklyn… so I guess what’s next? Downtown San Jose is the next Bronx? We’ll see.

Regardless, we still need as much housing thrown at us as developers could ever muster… and I don’t see rents backing off from aggressive growth anywhere for a while (even if San Francisco rates are long past sustainable growth levels). But the emergence of the new Oakland tech corridor is just what the doctor ordered.

This post is commentary from the latest weekly edition of our Bay Area Research Rant, which you can subscribe to for free by e-mailing robert.sammons@cushwake.com.

garrick-brownGarrick joined Cushman & Wakefield (formerly DTZ / Cassidy Turley) in October 2010. He serves as Vice President of Retail Research for the Americas. He speaks frequently at industry events and has been a keynote speaker at symposiums, conferences and market forecasting events for groups like the Appraisal Institute, Urban Land Institute, CREW, ICSC and PRSM. He is also a member of Lambda Alpha International, an invitation-only land use society for those who are involved in the ownership, management, regulation and conservation of land, but also those who are involved in its development, redevelopment and preservation.

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