Who’s going to brew morning lattes for San Fran vulgarians?

AACI | Vice President, The Regional Group of Companies Inc.
  • Feb. 26, 2014

John ClarkA class war has begun in San Francisco.

Just look at the papers. Earlier this week, the Ottawa Citizen republished a London Sunday Telegraph story with the headline, “High-tech vulgarians at the gate in San Francisco.” The San Fran Bay Guardian recently published a lengthy feature titled “Staying Power: San Francisco tenants’ movement rises up and sets the agenda.”

At issue is the fact the growing population of affluent tech workers in the Bay Area is driving up property values and driving demand for redevelopment and infill projects. Landlords are taking advantage of legal loopholes and fine print to evict tenants from low-income and rent-controlled properties. Most of these tenants are honest, hardworking individuals of modest means. Their only crime is that they didn’t become millionaires with Twitter’s IPO, or don’t happen to work for Google and enjoy the salaries and benefits that come with it.

Well-to-do tech workers want an upscale, urban lifestyle. Landlords and developers want to cash in, but first, they must brush aside the humble folk who stand in their way. As the Telegraph reports, tech titans like Google and Facebook are aggravating the situation by running their own private commuter shuttles, making it easy to live in central San Fran and commute to work in San Jose and Silicon Valley.

“Often tone-deaf industry”

The Telegraph story refers to “an arrogant and often tone-deaf industry” that has alienated San Francisco residents with their lavish lifestyles, and focuses on that theme of simmering class war against a backdrop of growing social unrest. The Guardian piece runs with that too, by putting faces and names to the communities and residents who are suffering the most.

Which is all fair, but there is also the economic side.

No city can survive without a rich mix of retail, dining, entertainment and other leisure activities and services. Restaurants, clubs, coffee shops, specialty boutiques, even the classic corner store or barber shop, all contribute to the key reason many people favour urban living – most everything they want and need is close.

These businesses need staff, but such service jobs rarely pay much. Even the business owners are often eking out only a modest living.

If this class of worker or business owner can no longer afford to live within a reasonable distance of work or operate a business in a certain area, what happens?

Quality of life, the working poor and the urban core” – you may recall this post of mine from last July, in which I talked about the challenges of the working poor, trying to survive while working in the jobs that must be filled by someone. Many of these people don’t fall into the “working poor” category because they make only minimum wage. How much you earn is often less important than what you spend. In this case, it’s what they are forced to pay in terms of inflated housing costs.

It isn’t just coffee baristas and retail clerks. This working class includes the property maintenance staff crucial to the upkeep and operation of those shiny new condo buildings, for example.

If this segment of the population is priced out of the inner-city market, they will have to seek more affordable housing on the urban fringe, without the benefit of a company shuttle to scoot them to work. Their transportation costs and travel time will increase and perhaps even become unmanageable. Welfare may become their only alternative. At the very least, they will have to seek other employment closer to home in the ‘burbs.

Displacement serves no one

This displacement of people serves no one, especially in an economy driven by consumer spending.

In San Francisco’s case, the good news is civic leaders are taking action on behalf of the working class. A grassroots movement has brought together various community groups, and the formulation of legislative proposals intended to curb the ability of landlords to unfairly evict tenants.

What should we take away from all this, up here in the Polar Vortexed North?

Gentrification is happening all across Canada. Redevelopment and densification is putting the old at odds with the new and making it difficult for even well-educated young people with good prospects to manage an urban lifestyle. Just look at the condo crazes in cities like Vancouver and Toronto. 

It’s easy to dismiss the underlying issues as social, which fosters the popular perception they are of secondary importance to “progress” when there is money to be made.

But we have to remember that a vibrant and healthy city core needs more than well-heeled condo dwellers. The basis of its economy rests on that modest working class, and providing them the means to enjoy a decent quality of life with dignity.

To discuss this or any other valuation topic in the context of your property, please contact me at [email protected]. I am also interested in your feedback and suggestions for future articles.

John Clark is Vice President with The Regional Group of Companies Inc. He has more than 33 years of experience in the real estate appraisal field, is a fully accredited…

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John Clark is Vice President with The Regional Group of Companies Inc. He has more than 33 years of experience in the real estate appraisal field, is a fully accredited…

Read more

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