It seems the only kinds of businesses able to survive in San Francisco these days are places like Sightglass Café (owned by Twitter CEO Jack Dorsey) that are cross-subsidized by high tech capital or other Wall Street investors. Independent entities like us simply can't make the numbers work, the costs involved are too great. [...]
Of course we understand the current restrictions are necessary in order to protect public health. What we don't understand is why we've received no compensation at all for our losses, and yet are simultaneously sadistically being shaken down for our rent money. Is rent extraction really an essential service? Shouldn't these businesses be shut down and forced to lose money as well? [...]
I just don't get why the resulting economic burden is being shouldered by those least able to bear it. Can't some of our numerous local billionaires ante up? Can't the rent extractors be asked to make some sacrifices?
Instead it seems as if this epidemic is providing the tech industry with what they've long desired; an opportunity to wipe out any alternative to their alienated culture of screen zombies and delivery slaves. As they say in disaster capitalism, never let a good crisis go to waste. And no doubt the real estate industry (which is intimately related to the tech industry) will come in at the end and clear us all out for non-payment on massive amounts of back rent.
Previously, previously, previously, previously, previously, previously, previously.
As the owner of an independent establishment, us there any evidence the tech bros have stepped up and put their money where their mouths are?
It depends on what you mean by "tech bros". Do you mean "well-paid employees"? Or do you mean "VCs"?
On our Patreon I have ten -- count 'em, ten -- people who have sprung for the $200/month membership. (And I am very grateful for their support!) I can only assume that those people work in tech. But I'm also assuming that they are not of the "financier" caste.
(Prior to COVID-19, we had one member at that level, so I won't even know until next month which of those turn out to have been one-time donations rather than ongoing.)
The Klept doesn't contribute. They make foundations and partnerships so that they can keep making profit and look charitable.
From up here North things aren't quite as dire, but there are similar short comings. The banks and Government were quick with "helping" out mortgage owners, renters were completely forgotten.
As most of this is Provincial responsibility it's really up to the Provinces, most have at least put a stop to evictions for the unforseeable future and BC nixed any approved rent increase as well (the NDP Government in 2018 also nixed the extra profit taking by landlords. Up until then they were allowed to increase rent by inflation rate plus 2%, that extra 2% is now gone).
Overall, as slow and haphazard as some Government responses up here were, they were still a far cry better than what I am watching south of the border, from preparing the healthcare systems (again, a Provincial responsibility), to actually making aid available (e.g. CERB, low requirement (basically, don't make any money) which provides 2K/month for up to four months (for now), to small business loans ($40K of which 1/4 is forgiveable if you pay it back before the end of 2022) whose only requirement was initially that you had a payroll of 50K/year or higher (now lowered to 20K).
You can actually get something for the taxes you pay when the chips are down.
All the best for you guys though, I really wonder how this will change the US in the end.
I'm missing something. How is the real estate industry "intimately related to the tech industry?"
Indirectly, in a neighborhood like Chelsea, the presence of 'tech' drives up rents, drives up real estate prices for condos/etc., and is one of the first steps in gentrifying a place. Real estate brokers love big tech companies like The Googs because they first get to sell them a billion dollar building, then get to watch as the surrounding real estate surges in value over the next few years.
That's like saying I have a "direct relationship" with the mosquito that's sucking my blood and giving me malaria.
Eek... I only knew about the indirect gentrification. Thanks for the info.
None of the therapists in my office suite have met with clients face to face since early to mid-March. May rent is soon due, and suite-mates have asked me about approaching the building owner to see if we can get a temporary rent reduction. Anybody want to place a bet on how that will go?
It depends on:
Whether the owner believes they could rent those offices to somebody else who either can pay now or will be more likely to survive to pay later. It doesn't matter if their belief is justified.
Whether the owner's expenses are such that losing some rent in the short term seems like a insurmountable problem or just an inconvenience proportional to these unusual circumstances.
Whether the owner is an asshole and would rather they lose everything than risk anybody else being happy.
To elucidate on that second item, it really matters whether the "owner" is one retired plastic surgeon for whom your rent is personal income, or a vast uncaring corporation. And not always in the way you'd expect. For the vast uncaring corporation it's just numbers, losing $1M on monthly San Francisco rent across the portfolio is just a number in a spreadsheet, the person saying "Yes" to you doesn't have to reach into their own pocket to find your rent money, let alone the firm's $1M overall cost. Whereas Jimmy may feel he really needs that new yacht, if you don't pay next month's agreed rent it's like you're stealing from him personally and he wants you gone.
Or of course, vice versa. Saying "No" on behalf of a corporation is easy and the person saying it won't feel responsible when the resulting wave of evictions means net income collapses, they were just doing their job. And maybe Jimmy doesn't really need all that money for a new yacht when he can't leave the house anyway so he's fine if everybody pays what they can until things get better.
So the final item is the most important. Which of course isn't ideal when the guy running the whole country is an asshole.
Here in Sydney, Australia, the government have made efforts to share the burden.
For residential leases, if you can demonstrate a 25% or more loss of income due to COVID-19 then you can't be evicted because of non-payment of rent for the next six months and the notice time for other evictions has lengthened as well. The rent still accrues but you can ask your landlord for a rent reduction and if they refuse they must document why not (eg couldn't get a reduction in mortgage payments).
For commercial leases for small and medium companies, if they can demonstrate a 30% loss then their leases must be renegotiated and landlords must offer reductions in rent (as waivers or deferrals) based on the tenant’s reduction in trade during COVID-19 and any discounts the landlords get from the government or the banks.
This is disturbing. Normally a landlord would be motivated to work out financial terms with a tenant who’s income was cut off. The tenant after all is the customer and no business can survive without customers.
What might be going on here is landlords attempting to force out tenants holding long term leases on the expectation that the unit can be leased for a significantly higher rent. Kind of like forcing out rent controlled tenants. And even if the courts take the side of disadvantaged retail tenants, how many of these mom and pop shops have the cash to sue their landlord?
I quite agree with you, but I have a problem with viewing tenants (especially residential) as customers. The landlord could potentially hold the property indefinitely, as can be seen in many cities, but when the businesses own the entire earth, it's kind of like saying I'm a "customer" of breathing air. I would hope that this thing would cause people to reassess the necessity of the massive wealth transfer/economic drain that is real estate, but I'm not holding my breath.