Make Room for Dot-Coms

Forget about live-work lofts. The newest fight for San Francisco's soul is over multimedia office space.

Brian Bock bounds up a makeshift stairway in a former warehouse at 530 Folsom St., past yards of sandblasted brick, a gallery of as-yet-unglazed windows, and a forest of rustic, steel-reinforced wood pillars.

"This was one loft in the original plan," says Bock, a tall, neatly groomed developer sporting the breezy authority customary among the strivers populating this part of town. "You'd have entered right here," he says, directing attention to a brick, steel, and pine expanse about the size and shape of five joined bowling lanes. Dressed out a certain way, the space would have contained an unconfined kitchen, sleeping area, living room, work space, and bathroom. "This would have been your loft space, with the mezzanine right here," Bock explains, in a near-wistful tone.

Instead, this former warehouse for the George W. Caswell Coffee & Tea Co. will soon become the corporate home for Critical Path Inc., which makes e-mail systems for businesses. Airy desk pods will replace spacious kitchenettes. Industrial-chic conference rooms will rise from floors once designated as living-room-slash-sleeping-areas.

Paul Trapani
Developer Brian Bock inside the former George W. Caswell Coffee & Tea Co., once slated for live-work conversion, which will now become home to Critical Path Inc.
Chris Anderson
Developer Brian Bock inside the former George W. Caswell Coffee & Tea Co., once slated for live-work conversion, which will now become home to Critical Path Inc.

Bock has recently abandoned plans for this and two other South of Market live-work warehouse conversions, and is now dressing out the same buildings as commercial properties. It is no coincidence that, within just the past few months, commercial space has come to demand $4 per square foot per month, while residential space fetches $2.50 per month, Bock says.

"It's kind of a no-brainer to say, 'Forget the live-work or residential because I'm getting 50 percent or more on commercial,'" says Bock. "I wouldn't consider live-work anymore. The economics aren't there."

This seemingly subtle shift in the business plan of a minor builder actually portends a social, economic, and political temblor for San Francisco.

The city's live-work loft boom -- perhaps the most polarizing political issue of the past three years -- is receding with a whimper, not the bang neighborhood activists had hoped for. Market forces, not political struggle, are quietly erasing the economic logic of live-work buildings.

In the lofts' place is rising a bidding frenzy for high-tech office space. The Midas-rich venture capitalists, sleepless entrepreneurs, and trendy-hipster-brainy kids who populate the new digital-network industries have decided among themselves that San Francisco, and especially San Francisco's old, southeastern industrial region, is the only place to be.

During the past few months, rents for multimedia commercial space have shot past those that builders are able to charge for live-work lofts. Bock, and developers like him, have halted live-work projects midway, throwing out expensive architectural plans, abandoning hard-won live-work building permits, and steering their business plans toward the dot-com boom. This fact, and the economic and social reverberations it will create, shall be the subject of City Hall, courtroom, and neighborhood struggles to come.

The city's old-line anti-growth agitators -- who shaped progressive politics during the 1970s, '80s, and '90s -- are trying to catch up as they see the slow-growth battleground shift under them, from live-work lofts to multimedia office space. Some of these players are already laying plans to curb the development of multimedia space in the South of Market, Potrero, and Mission areas. They are erecting battlements along the same lines as the live-work struggles before, arguing that these new commercial developments will supplant light industry and drive out blue-collar jobs. The dot-com buildings worsen already awful traffic congestion, and aggravate an unsupportable demand for housing, these activists say. The glut will make San Francisco whiter, richer, less diverse, and less politically aware -- another Boise-style West Tech boomtown. And as San Francisco grows as a Web colony, the Left Coast City of legend will fade into virtual reality, according to this worldview.

"The priority should be to provide enough housing rather than enough commercial space," says Supervisor Tom Ammiano, warming to the cause.

"I don't want to have a situation where the only people who are valued are overeducated, financially ambitious office workers," adds Sue Hestor, a longtime anti-growth agitator and an author of a pivotal anti-growth measure passed by the voters in 1986.

The measure, referred to reverentially in progressive circles as Proposition M, was drafted as the most restrictive anti-growth legislation in the country 14 years ago. But, just as in the case of the live-work lofts, market forces made these no-growth provisions all but irrelevant as the S&L crisis, a California real estate recession, and high Financial District vacancy rates accomplished overnight a task that took anti-growth activists most of the 1970s and '80s.

Indeed, the growth-limiting provisions of Proposition M are only becoming relevant this year, as the city for the first time in a decade has more new office space under review than it can legally approve. And not just a little more. The San Francisco Planning Department now has requests from developers for new office construction that, taken together, would add more than a million square feet beyond what is allowed under Proposition M.

Growth-friendly politicians, multimedia lobbyists, and developers, meanwhile, are drafting legislation seeking to circumvent these growth-control laws by creating a new zoning category for digital media space. Under this scheme, high-tech lofts would not be counted as office space, and thereby not fall under yearly office-tower construction limits instituted by Proposition M.

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