SAN FRANCISCO’S BIZARRE 6X6 SHOPPING MALL.

Posted on August 30, 2019 by Mark

The 6X6 Mall on Market Street between 5th and 6th Streets is the biggest shopping mall in downtown San Francisco. This huge 5-story mall is beautiful and has everything you would expect to find in a luxury shopping center, including a 4-story greenhouse atrium and a double helix escalator that can be seen from the street. There is only one thing missing from this shopping mall – stores! There are no stores. There are no restaurants. There are no kiosks. This mall was completed in 2016, but it is still completely vacant. The owners have tried everything to lure in tenants, but nothing has worked. The problem is the location. The 6X6 Mall is in a bad section of the Tenderloin district. All of the stores adjacent to this mall and on the other side of the street are abandoned and boarded up, with homeless people sleeping in doorways. This is another example of: ‘What were they thinking?“, building a luxury shopping mall in the poorest and most depressed area in the city. A few weeks ago, the 6X6 Mall was sold to a couple of major commercial real estate investment firms. They haven’t said what they plan to do with it.

SAN FRANCISCO BANS CASHLESS STORES.

Posted on May 30, 2019 by Mark

San Francisco recently passed a law banning cashless stores. From now on, Amazon To Go stores will have to accept cash. The argument for this law is that poor people don’t have credit cards or cell phones and so cannot shop in these stores. The argument for these stores is that cashless stores can charge lower prices because they have no cashiers and that they safer places to work for the employees, especially at night, because these places all have surveillance cameras and there is no cash to rob. Oakland is in the process of passing a similar law. I have been wondering if Berkeley is going to pass a law like this next. There are no cashless stores in Berkeley, but that probably won’t figure into the debate at the city council on this. Berkeley has lots of laws regulating businesses that don’t exist in Berkeley, like gun stores and slaughterhouses.

Cashless Society. Personally, I think banning cashless stores is just fighting the inevitable. Industrialized nations everywhere are moving to cashless economies, and that has been going on for generations. 100 years ago, there were no credit cards, and most people didn’t have checkbooks. When I first became a landlord, a lot of tenants paid their rent in cash. Now, every landlord I know has a clause in his leases requiring tenants to pay their rent by check, money order, or electronic transfer. There are lots of things that used to require cash but don’t anymore, like taxicabs and parking meters. I know several people who keep no cash in their wallets and not because they are poor. Although the San Francisco bay area is the world center of high technology business, we seem to elect a lot of Luddites here, politicians who are hostile to and fight new technology, the very businesses that have made them and their cities rich.

“WHY CAN’T I PAY MY RENT WITH A CREDIT CARD?”

Posted on January 28, 2018 by Mark

Every now and then, a tenant will ask me if he can pay his rent with a credit card. My answer is No. All of my leases state that the rent must be paid by check or money order. I don’t accept credit cards. Why? It’s the bank fees. Most of the new apartment houses in Berkeley and San Francisco allow tenants to pay their rent with credit cards, but that’s because credit card fees are an insignificant expense for them. A 2 bedroom apartment in a new building in downtown Berkeley rents for $4,000 to $5,000 a month, but I’ve seen some that are over $6,000 a month. If I was getting that kind of rent, I would accept credit cards too!

BITCOIN.

A growing number of landlords are allowing their tenants to pay their rent with Bitcoin. I really, really don’t understand that. Cryptocurrencies like Bitcoin are not currencies, they are not money, and they are not legal tender. I don’t know what they are, but I do know that I can’t pay my property taxes, garbage bills, fire insurance, etc. with Bitcoin. I can’t buy cocoa beans with Bitcoin either. I think some businessmen accept Bitcoin because they think it’s tax-free income; however, income that you don’t report on your tax return is not tax-free income. That’s called income tax evasion, not tax-free income. You don’t need to be a CPA to know there’s a difference. Supposedly, Bitcoin transactions and transfers are completely secret and untraceable, but I wonder if that’s really true. I suspect that the IRS has figured out how to crack Bitcoin’s computer codes.

Military Grade Encryption. People tell me that there is no way the U.S. government can get into Bitcoin computer records because they use military grade encryption. But what does that mean? Does ‘military grade encryption’ mean ‘unbreakable’? As you know, I teach history, and history tells me to be very suspicious of unbreakable military codes. For over 5,000 years, governments have been trying to create unbreakable military codes, but without much success. During World War 2, the Germans thought they had an unbreakable military code, but Winston Churchill and Franklin Roosevelt got decoded copies of Hitler’s most secret coded messages to his generals before the generals to whom they were addressed got their decoded copies! That went on all through the war too. During World War 2, the U.S. also broke the Soviet diplomatic code and several Japanese codes.

The Battle of Midway. The biggest naval battle of World War 2 was the Battle of Midway. There will never be another naval battle like that again. The Japanese were hoping to win a decisive victory that would knock the U.S. out of the war. The Japanese thought they were going to catch the U.S. fleet by surprise; however, the U.S. Navy had broken the Japanese naval code, so they knew where and when the Japanese were coming. Instead of ambushing the U.S. Navy, it was the Japanese that got ambushed instead. The U.S. Navy sank all the Japanese aircraft carriers at Midway. As a result, Japan also lost hundreds of their best pilots. After all the Japanese aircraft carriers were sunk, Japanese pilots had no place to land. When they ran out of fuel, Japanese pilots crashed their planes into the sea and drowned. Midway was a disastrous defeat for Japan from which they never recovered. Prior to Midway, Japan was always on the attack. After Midway, they were always on the defense. OK you say, that was then, but what about now? Now we have military grade computer encryption. Well Yes, we do have that, but you know, Vladimir Putin didn’t seem to have much difficulty getting past U.S. computer encryption during the 2016 presidential election. I think that people who do business in Bitcoin in the belief that they are fooling the IRS may actually just be fooling themselves instead.

LAKE TAHOE SOUVENIRS.

Posted on June 28, 2017 by Mark

Salt Lake City. Last month, I wrote that salt water taffy is the top-selling souvenir purchased by tourists visiting Salt Lake City, and tourists buy the stuff simply because they make a mental association between salt water taffy and the Great Salt Lake, even though there is no salt water in salt water taffy. Since then, 2 very well-educated people I know and who read my newsletter told me that purchased salt taffy at the Salt Lake City airport as souvenir gifts and assumed that it was made from Great Salt Lake water. Well, I saw the same sort of thing at Lake Tahoe last week. I was at the lake for a couple of days. While I was there, I visited a number of the souvenir stores that line Highway 50, the main street in town.

Huckleberries. Huckleberry food products were – by far – the best selling edible souvenir at Lake Tahoe. Several gift shops at South Lake Tahoe had big displays of huckleberry products, including Lake Tahoe brand huckleberry jam and jelly, huckleberry taffy, huckleberry syrup, huckleberry truffles, etc. All of them had the name of the lake on the label. However, there are no huckleberries at Lake Tahoe. They don’t grow anywhere in the Lake Tahoe basin. So why do tourists buy this stuff? It is simply because people mentally associate huckleberries with the mountains, and there are plenty of mountains at Lake Tahoe. The fact that there are no huckleberries at Lake Tahoe doesn’t matter at all.

Moose. Nearly every souvenir shop at Lake Tahoe had clothes for sale with pictures of moose on them. I also saw plenty of carved moose figurines and moose ash trays with ‘Lake Tahoe’ on them as well. People buy moose clothes at Lake Tahoe for the same reason they buy Lake Tahoe huckleberry jam. People make a mental association between moose and pine-covered mountains. However, moose are not mountain dwellers. Moose do not live in steep terrain, like mountain goats. Besides, there are no moose at Lake Tahoe. In fact, there are no moose anywhere in either Nevada or California. The nearest moose are hundreds of miles away.

Clam Chowder. I am beginning to think that this sort of thing happens at all tourist destinations. People buy souvenirs based not on what is actually there but rather based on the things that they mentally associate with the place. I suppose that is why the Number 1 selling menu item at restaurants at Fisherman’s Wharf in San Francisco and the Santa Cruz Pier is clam chowder served in a hollowed out bread bowl. However, the only restaurants in California that I am aware of that offer this dish are at places where tourists eat. It’s not a local dish. You won’t find clam chowder in a bread bowl at restaurants where native Californians eat. Besides, clam chowder is a New England dish, and New England is a long way from California. All of the clam chowder at Fisherman’s Wharf is made from concentrate or from imported canned clams. There is no commercial clam fishing in California.

San Francisco Rental Ad From 1970.

Posted on May 29, 2017 by Mark

Below is a section of the For Rent ads from the San Francisco Chronicle in 1970. Look at the prices. Although it may seem hard to believe, back in those days, San Francisco and Berkeley were considered cheap places to live, that is, compared to big cities back East like New York and Boston. One of the main reasons why the hippies came to San Francisco and Berkeley in the 1960s was because they could find cheap housing here. Counter-culture people in every generation move to places where they can find cheap housing. Then they move elsewhere when housing gets expensive. That is something that never changes. Tourists, mostly from foreign countries, still go to the Haight Ashbury district in San Francisco expecting to see hippies and ‘flower children’, but there aren’t any. A 1 bedroom apartment in the Haight Ashbury district now rents for $3,000 to $4,000 a month. Of course, a portion of the increase in rents in the Bay Area can be attributed to inflation, but only a portion. When I arrived in Berkeley in 1972, I rented an apartment downtown for $80 a month, and I knew people who were paying much less than that.

Global Warming

Posted on November 20, 2016 by Mark

When it Used To Snow In San Francisco. Donald Trump and a majority of the Republicans in Congress say that global warming is a hoax. Whenever I hear politicians say that, I think about photographs like this one. Its a photo of Market Street in February, 1887. People are in the street because the snow had shut down the cable cars and street traffic. Did you know that back in the 19th Century, it used to snow in San Francisco? Not frozen dew or a light dusting, but real snow. You can see old photographs of San Francisco blanketed in snow on Google Images. For example, on New Year’s Eve in 1881, snow began falling in San Francisco. It snowed continuously for the next 5 hours. The following day, the San Francisco Chronicle reported that telegraph and telephone service was interrupted throughout the city because of downed wires and fallen tree branches. Boys and girls had the day off from school. They built snowmen and had snowball fights all over the city. Many of the palm trees and flowers in the exotic gardens in Golden Gate Park were killed by cold and the ice that covered them. Now I have lived in Berkeley for over 40 years, and I have never seen snow on the ground here. The last time it snowed in San Francisco was 1976. The city got 1 inch of snow, and the next day, it was gone. San Francisco is not alone. There are many places around the world that used to regularly get snow but don’t anymore.

The Irish Potato Famine. Hundreds of thousands of people died in the Irish Potato Famine. The potato crop failed in 1845 due to a disease called potato blight. The disease spread quickly, destroying nearly all the potatoes in the country. By 1846, people in Ireland were in a bad state of affairs. Even before winter arrived, millions were weak from hunger, and to make matters worse, a lot of people had sold their winter clothing and shoes to buy food. Winter came early in 1846, and the winter that year was bitterly cold. Snow started falling early, and it kept falling. In some places in Ireland, snow drifts were 10 feet deep. People living in remote areas, already weakened by hunger and cold, were unable to get to one of the few food relief centers in Ireland because snow blocked their way. Here is a letter that was written by an English observer in Ireland at the time and that appeared in a London newspaper in 1847. “Among the thousands I meet, I have seen no one who had clothing corresponding to the bitter cold which is now experienced; on the contrary what is beheld is emaciated, pale, shivering, worn-out farming people, wrapped in the most wretched rags, standing or crawling in the snow, bare-footed and freezing.” People who live in Ireland today find it hard to believe that they ever had winters like that, but then – people who live around here are often very surprised when I show them old photographs of Market Street in San Francisco covered in snow.

The Northwest Passage. I used to know a magician named Dan X. Solo, a very nice guy. For over 20 years, Dan worked on cruise ships that went up the west coast to Alaska. Dan did table hopping magic and magic shows aboard these ships. Dan used to tell me that global warming was very obvious to him – and profitable as well! That was because every few years, the Alaska cruise ship season got a little longer, and that was because the seas in the Alaska inner passage were ice-free longer every year. Dan said that when he first started working on cruise ships, the Alaska cruise ship season was from June to August, but when he retired, the season was from May to September. The season had gone from 3 months to 5. Since Dan Solo’s death a few years ago, the Alaska cruise ship season has gotten even longer. And now, cruise ships are traveling from Alaska to New York through the Northwest Passage. In September, the cruise ship Crystal Serenity arrived in New York City from Vancouver, Canada across the Arctic, a trip that was unimaginable just 20 years ago. The voyage took 28 days. The passengers were not ‘roughing it’ through the Arctic. The Crystal Serenity has 13 decks, multiple indoor swimming pools, a casino, movie theater, a spa and health club, a golf driving range, and 6 restaurants. The ship actually has 12 restaurants if you include the specialty restaurants like Silk Road and the Sushi Bar. The ship has an herb garden and olive trees aboard the ship so diners will have fresh ingredients. Each passenger paid between $20,000 and $120,000 to take the trip. Many more Northwest Passage trips are scheduled for 2017.

Evidence of global warming is not hard to find. It is everywhere. It is not surprising to me that all of the politicians who say that global warming is a hoax get big bucks from oil and coal companies. “It is difficult to get a man to understand something when his salary depends upon his not understanding it.” – Upton Sinclair, 1935.

Where Will The Middle Class Live?

Posted on September 29, 2016 by Mark

Parker Berkeley is the newest apartment house in town. This place is huge! Parker Berkeley covers a whole block plus part of the block across the street. It is not on a spiffy section of Shattuck Avenue, and it is a long way from campus, but it is walking distance to the Ashby BART station. My guess is that the owners of this building are planning to rent to commuters who work in San Francisco. The rental office is now open and here are the rents:

Studio $2,900.

One bedroom $3,400

Two bedroom $4,500

Three bedroom $6,300
Parking is extra, plus the rent is higher if you have a cat or a dog.

If these rents seem high to you, remember that rents for similar apartments in downtown San Francisco are much higher than this. Like all new apartment houses in Berkeley and San Francisco, Parker Berkeley has inclusionary apartments for the poor, but all the other apartments are rented at market rate. So here is my question. If all the new apartment houses in town only have apartments in them for the rich and the poor, then where will the middle class live? I have been asking that question for 30 years. Consider a schoolteacher who makes $70,000 a year. This teacher doesn’t make enough money to rent a market rate apartment at Parker Berkeley but makes far too much money to qualify for an inclusionary apartment. So where will this schoolteacher live? Certainly not at Parker Berkeley or any of the new apartment houses going up in Berkeley or San Francisco. America has long been a middle class society, but we are building no housing here for the middle class. None at all. Zero. Zip. What kind of society are we going to live in if we only build housing for the rich and the poor? I never, never hear local politicians talking about this issue, the complete lack of new housing for the working middle class. It never comes up. I wonder why.

The Millennium Tower Is Sinking.

Posted on August 30, 2016 by Mark

I have been a landlord for over 40 years, but I have never owned an apartment house. Realtors have often tried selling them to me, but I have always said No. I have always believed that single family houses make the best rentals. Houses are the easiest rentals to manage. Plus, single family houses and condos are exempt from rent control by California state law, and that supersedes all local rent control laws. If you ever decide to become a landlord, my advice is that it is much better to own and rent several single family houses than one big apartment house. When I read about a landlord who is involved in some sort of horrible mess with his tenants or the government, that mess is almost always in a big building, not a single family house. Here is a dilly of a mess in a big building….

The Millennium Tower is the tallest and most luxurious residential building in San Francisco. The 58 story Millennium Tower opened for business in 2008. It is located in the financial district and is home to many high tech multimillionaires and San Francisco celebrities, including Joe Montana and Giants star Hunter Pence. It is understandable why people like that live here. The Millennium Tower has a long list of incredibly luxurious amenities. Predictably, if you want to live in the Millennium Tower, you need to have very deep pockets. These condos are very expensive. Some units have sold for $10 million. Hunter Pence paid $4 million for his condo.

That Sinking Feeling. Unfortunately, the Millennium Tower is sinking. The tower was built on land that was, at one time, under San Francisco Bay, and bedrock is very far down. Beneath the Millennium Tower is almost 200 feet of mud and sand. Because of this, most of the high-rise buildings in this area have steel pilings under them that go down to bedrock. However, in order to save money on construction costs, the builders of the Millennium Tower did not drive pilings down to bedrock. Instead, they only drove pilings down 80 feet. As the result, the Millennium Tower is built on dense sand, not bedrock. That is why the building is sinking. Since its opening 8 years ago, the Millennium Tower has sunk 16 inches, and it is still sinking. To make matters worse, the building is not sinking evenly. The Millennium Tower is sinking faster on the north side than the south side. As a result, the building now leans 2 inches towards the north. The Millennium Tower is in no imminent danger of collapse, but if the sinking and tilting continue, the building may have to be torn down. Sounds unbelievable, doesn’t it?! What can be done? Well, engineers are trying to figure out a way to stop or at least slow down the rate of sinking and tilting, but it isn’t certain that anything can be done. One thing is certain. There will be a lot of lawsuits over this mess, and some lawsuits have already begun. Some of the condos in this building belong to San Francisco’s best lawyers, and needless to say, anyone can afford to live in the Millennium Tower can also afford to hire a lawyer, and a very good one too.

Prices. The sinking and tilting seem to have had little effect – thus far – on the prices of condos in the Millennium Tower. The real estate market in downtown San Francisco is so hot that buyers are willing to overlook ‘minor defects’ (as one realtor put it) such as the sinking and tilting. To give you an example, unit #502 in the Millennium Tower is currently for sale. It is the most expensive one-bedroom condo currently for sale in San Francisco. In 2012, it sold for $1.8 million. It is now priced at $3.8 million. It is a spacious unit, but still, that’s an awful lotta money for a 1 bedroom apartment! The HOA (Home Owner Association) fees are also pretty stiff here and can run several thousand dollars a month, depending on the size of your unit.

Rents. I can’t tell if the sinking and tilting has affected rents. There are quite a number of units in the Millennium Tower listed for rent on Craigslist, but prices seem to be all over the place. Some 1 bedroom units are listed at $5,000 a month while others are listed for $10,000 a month. Although these rents seem high, they are not out of line for luxury buildings in that part of San Francisco. On the other hand, most luxury apartment houses in San Francisco aren’t sinking or tilting.

P.S. – Does something about this story sounds familiar? Well, if you went to a Christian Sunday School when you were a kid, you are probably thinking about a line in the book of Matthew that says that a wise man builds his house on a rock but a fool builds his house on sand. Oh well. I guess the people who built the Millennium Tower didn’t go to Sunday School.

Would You Believe A 5 Square Foot Kitchen?

Posted on October 30, 2015 by Mark

Micro apartments and condominiums in San Francisco keep getting smaller, and so do their kitchens. Below are photos taken from San Francisco Craigslist rental ads. These are examples of what is politely known in the City as ‘efficiency kitchens.’ Each kitchen measures less than 5 square feet. In that tiny space, they somehow squeeze in a stainless steel sink, a stove, a refrigerator, a microwave oven, and some shelves or a storage cabinet. Just because these kitchens are tiny, doesn’t necessarily mean these apartments are cheap. They are in San Francisco, where the average 1 bedroom apartment now rents for $3,600 a month. Whenever I see ads for newly-built micro apartments and condominiums in San Francisco, I think: ‘Well they can’t get any smaller than that’, but they always do. I wonder how they will make kitchens smaller than this.

Internet Companies Finally Discover Oakland.

Posted on September 30, 2015 by Mark

I have been wondering for a long time when internet companies were going to discover how much cheaper it is to do business in Oakland than San Francisco. Commercial office space in downtown Oakland is half the price of comparable space in San Francisco, just 10 miles away. It seems like that day has finally come. When Capwell’s department store in downtown Oakland opened for business 85 years ago, it was the biggest and most beautiful store in the East Bay. The Beaux Arts building featured an 85 foot high atrium with a domed stained glass roof. After Capwell’s went bankrupt more than 20 years ago, it became a Sears store, but the building was so large that Sears never used all of the space, and they covered up most of the building finer architectural features. After Sears moved out, the building was vacant for many years. The Capwell’s building is now undergoing an expensive renovation. It is being converted into office space for internet companies. Part of the building has already been leased to Uber, which will move 600 employees there from San Francisco. Ultimately the building, renamed Uptown Station, will house about 3,000 high tech workers. The ground floor will be filled with stores and a food court. The roof will become a garden and picnic area. The 19th Street BART station is right next to the building, and there is a direct entrance into the building from the subway station. That is probably the building’s single most valuable asset.

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