< Back to JVM's Blog

Mark Cuban Was Right; SF’s Death & Revival; IKEA & Honey Badgers

News of IKEA purchasing retail space in San Francisco was announced while raging wildfires cover the bay area in eerie orange light and smokeA few weeks ago I blogged about The Death of New York City, citing another blog by James Altucher that set out reasons why NYC is not going to recover: the loss of business opportunities; the loss of cultural events; and the loss of restaurants.

I also mentioned how Dallas Mavericks owner and Shark Tank star, Mark Cuban, brushed off the blog by stating that NYC will see a revival as soon as rents and prices drop enough for new opportunities to arise.

And surprisingly, we are already seeing that in a city that is getting hit every bit as hard as New York City.

That city of course is San Francisco.

Hipsters, Techsters, and VC magnates alike are leaving San Francisco in droves as a result of the COVID crisis and other issues.

SF’s real estate market is proof of this, as the counties surrounding San Francisco are all booming while SF is the only area that is languishing.

In this SF Chronicle article, Kathleen Pender shares a multitude of stats to prove the point.

July sales were up 36% and 28% year over year in neighboring Marin and Napa counties respectively, while they were up only 1.4% in San Francisco.

In addition, prices were up year over year 23% in Marin County and 19% in Contra Costa County, but only 4% in SF (amazingly weak given that there should be pent up demand after an even slower COVID-ravaged spring).

SF has likely not seen the worst yet either, as inventory has surged.

Single Family inventory is up 30% year over year, to about 600 listings in August.

And Condo inventory is way up, with almost 1,200 listings, up from about half that level last year.

The SF condo market is in fact downright “cool” which is a shock in this very low rate, high demand environment.

Seeing declines like this is scaring the bejeebers out of everyone.

RIGHT BLAMES CRIME & HOMELESSNESS; LEFT BLAMES COVID & LACK OF FUNDING

People who lean right insist that this is the inevitable result of crime, homelessness, filth and anti-business ordinances such as very high minimum wages.

People who lean left blame the decline mostly on COVID and the desire to avoid long commutes as well as on the lack of funding to help the downtrodden.

IKEA = HONEY BADGER

IKEA, however, is just like the Honey Badger; it don’t care.

IKEA ignores politics and predictions of doom and gloom and only looks for opportunities.

This is exactly like Mark Cuban, a billionaire who is similarly good at tuning out the noise and acting on opportunities.

I say this b/c The SF Business Times recently reported that IKEA’s parent company is buying the entire 250,000 sq. ft. 6×6 Mall on Market Street.

Most of us, including me, would have been terrified of buying a huge retail center in a dilapidated part of a declining city, particularly when “brick and mortar” retail is hurting so badly in many areas too.

But, Mark Cuban was exactly right; prices no doubt fell to the point where such a purchase made sense.

And innovative retailers like IKEA are very skilled at tuning out the noise, spotting opportunities and repurposing real estate.

TAKEAWAYS FROM THIS BLOG

  1. Tune out the noise (for the third time 😊) and think like a billionaire, or ignore politics and negative predictions and just look for opportunities.
  2. The revival of cities like San Francisco may come sooner than we think.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167