Jesse R. Feldman

6 months ago, I moved to San Francisco. It’s the best place in the world to build, and one of the worst places to stay human. My unfiltered take: 1. SF is both overhyped and underrated The overhyped part: there are a lot of people with incredible resumes who are deeply unimpressive in real life. They were at the right company, at the right time, in the right market, and got carried by the wave. They made money, got comfortable, and now spend their time “exploring opportunities” over coffee, wasting your time. The underrated part: the top 1% here is insane. But almost impossible to get. Hiring in SF feels like being a guy on a dating app: everyone you want is out of your league, and everyone in your league wants someone out of theirs. The best people have unmatchable packages, endless options, and are optimizing for maximum impact: labs, frontier companies, or startups raising $100M pre-seed rounds. If you raised $10M from Tier 1 investors, you’re not hot shit here. You’re a B-player. It’s humbling. 2. There are fewer mission-driven people than I expected Especially on the application layer. A lot of people are in “secure the bag before it’s too late” mode. And honestly, it gives me the ick. The real religious builders I’ve met are often in labs, hardware, biotech, deeptech, defense — places where the work is hard enough that you can’t fake obsession. 3. The status game favors builders This is what SF does better than anywhere else. It rewards obsession. It rewards weirdness. It rewards people who make building their entire personality. Europe punishes that. SF gives it status. If you’ve felt like an outsider your whole life because you care too much, work too much, think too radically, or refuse to be chill about things that matter, this city will make you feel less insane. 4. The market liquidity is absurd Even if you don’t build a billion-dollar company, if you manage to build a strong product with a great team, someone smart might still acquire you for $ 100M. Yeah I know, it’s not your dream outcome as a founder, but on the days you feel desperate, it helps to keep going. 5. SF does not care about the meaning crisis that’s coming Anyone paying attention here can feel that something massive is happening with AI. But I’m shocked by how little people talk about the meaning crisis coming next. Everyone wants to talk about AI liberating humanity. Almost no one wants to talk about what happens when work — the thing that gives most people identity, structure, dignity, status, and purpose — starts disappearing. The vacuum will not be peaceful. People are underestimating the chaos that comes from humans suddenly having no idea why they matter. And I really feel like no one cares. 6. Personally, I’ve never been more unhappy I moved to SF and entered the matrix. I’ve always been intense. I’ve always worked crazy hours. But here, I lost the last parts of myself that were not about building. I don’t go to events. Most networking events feel like theater for people pretending to be important. The only events worth going to are small, curated dinners with people who are actually alive. I’ve made 0 real friends. I don’t do well with transactionality. I don’t do well with people constantly performing greatness. I don’t do well with rooms where everyone is optimizing and no one is being honest. So yes, SF is lonely, transactional, delusional, addictive, inspiring, boring, extraordinary, and completely insane. But it is still the only place to be right now if you’re a founder trying to build the next wave of humanity. And for now, that’s enough.

@champtgram This comparison makes zero sense.

it is absolutely insane that people visit miami just to spend the whole time in WYNWOOD that is like if you went to NYC and instead of seeing manhattan you went to look at buildings in Newark for fun like what are we doing

@rockcat65 @WallStreetApes There we go, much better!

@TheRealJFeld @WallStreetApes If you insist. 🤣😎🦎🎭🥃☀️🐈😜🎁🎂🎊🙋‍♂️🎉😩🥳💕😔💩🎈🐶🍾🥲🦅📦

A 20 story tower in San Francisco valued at $320 million dollars went up for auction There wasn’t a single bidder. Not even for $1 The property is now vacant, because no one wants to make the investment in Democrat run San Francisco High crime rates and homelessness are cited reasons for office buildings like this to not see purchasers Bidding for the property started at $80 million, but no offers. A massive decline in value WeWork used to be a major tenant occupying nearly 200,000 sq ft in this same building

@rockcat65 @WallStreetApes I think your post needs more emojis

@TheRealJFeld @WallStreetApes Words like auction and foreclosure….yea…that gives me great confidence in San Fran….Jesse! 🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣

There have been limited exceptions to the 20% and if you’re not using SB35 it could be higher. And they’re are all ranges, so where $500 may be high, your hard and soft cost construction could be $1300. I hope the transfer tax goes away completely. Debating this when any of these costs are arguably in this range is like arranging deck chairs on the titanic. The investors that fund these projects are cut and dry economically motivated beings, and for far too few groups is the risk worth the reward. And everyone loses.

@TheRealJFeld SF's IZ is more like 10% (thanks to recent forms), and land is definitely not $500 psf (yes SF land is expensive but SF apartment buildings also tend to be very dense). You should be able to pencil at $1400 psf for new construction. The transfer tax will likely be cut this year.

Let’s do some quick math: Sell price: $2000 psf 20% affordable: -$200 psf Base building + interiors: -$1100 psf Land: -$500 Carry: -$100 psf Transfer tax: -$50 Commissions: -$100 Contingency: -$50 So, this looks like a great way to lose $100psf in the most painful fashion. We need more homes, we need to make them easier and faster to build. Unfortunately, we lead the world in construction costs, but not for any great reasons (it’s not because of union labor). The more homes we build, the more homes that become absorbed into the housing stock, the cheaper housing becomes. This is Occam’s razor. At $2k psf, this math should make sense. But it should also make sense at a much lower sales price. But right now it makes sense on too few projects.

@devahaz @WallStreetApes Thanks — @rohindhar convinced me that maybe RE Twitter should share our insights a bit more frequently

@TheRealJFeld @WallStreetApes Their audience doesn’t care at all about the facts, but I appreciate you taking the time to actually explain what actually happened with this transaction

@Londonman90 @WallStreetApes @grok And thank you. It’s too easy for all of us (myself very much included) to be mean online — wish we all spent more time together as opposed to behind keyboards.

@TheRealJFeld @WallStreetApes @grok Thanks for the clarifications here and in your other follow-ups.

@rafaelafal7 @WallStreetApes The market is still recovering and there are a variety of problems, but there isn’t a dearth of qualified buyers for quality assets such as this one.

@TheRealJFeld @WallStreetApes thanks for the clarification because I thought it’s pretty legit due to the problems in revenue in malls and stores in the SF area since there is a lot of crime there. so what you saying here is that office buildings in SF doesn’t have this problem?

A lot of this is correct, however I think a lot of folks would have bid above $130mm but the bid process wasn’t structured that way. However, this was a huge erosion in value (you are correct there) — that’s why there was so much interest and why the headline here is very different than the news

@TheRealJFeld @jaymast18282080 @WallStreetApes Soooo is the bottom line Lone Star paid $130mm (via lien purchase) on a property last valued at $320mm and got no bids higher than their $130mm? Sounds like a@60% reduction in value.

@BalkusLance @WallStreetApes But who specifically were you referring to?

@TheRealJFeld @WallStreetApes “The auction only happened because Lone Star owned the note AFTER that process, and then ran a foreclosure process. Probably related to bond holder losses or something, so it wasn’t a typical deed in lieu.” People who are making money in RE deals aren’t losing property foreclos.

@BalkusLance @WallStreetApes Who is “they?”

@TheRealJFeld @WallStreetApes You miss the point. They went bankrupt. It wasn’t a value proposition. People lost millions of real dollars.

@jackjohns0n_ @WallStreetApes Correct. But do you understand why there were no bids? Also, please don’t call me a dumbass, that one is reserved for my wife to call me.

@TheRealJFeld @WallStreetApes So what you are saying is there were no bids during the auction. thanks for stating the fucking obvious dumbass.

@Rothmus Not saying S.F. doesn’t have problems, but this is not what happened with this building. It’s completely inaccurate. Lone Star paid $130mm and the auction foreclosure was structured to be a failure. x.com/therealjfeld/s…

Yeah SF is dying. High crime, homelessness, and a dead office market have killed demand. Turning it into apartments, a hotel, or anything else costs way too much, plus strict rules, earthquake codes, and zoning make it almost impossible. So it stays empty offices in a city that doesn’t need them. Zombie all around.

Agreed! I’m certainly not here to defend how we got here or to argue that S.F. is some sort of utopia. There are real, longstanding, structural issues here. However, I will say I’m enthused at the sea change… and not just what’s happening in office real estate (there are almost two dozen companies looking for more than 100,000 sq ft right now). For SF, a market driven by technology, this can be a strong bellwether. Other changes — new approaches to open air drug consumption, car break ins (thanks to drones and license plate scanning) being way down, and a larger percentage of the voting populace being involved — are helping course correct for S.F.

@TheRealJFeld @jaymast18282080 @WallStreetApes Thank you. Things are bad on their own and could be better. We suffer from poor economic policy, graft, theft, fraud and soft on crime governance. There is no need to embellish, tell partial truths or take things out of context in an attempt to make it sound worse.

@LordVali117 @WallStreetApes Uh huh. So, what did Lone Star pay in order to acquire the loan?

@TheRealJFeld @WallStreetApes And I’m saying that at $80 million listed…and no one made a bid at that pricing. So, the original poster is still correct and this building lost an insane amount in its evaluation.

@LordVali117 @WallStreetApes Procedurally the bidding usually is set to start at a specified number, yes

@TheRealJFeld @WallStreetApes Did you not read the part where they opened an offer at $80 million and no one bid on it?😆🤷‍♂️

@TheRaybender @WallStreetApes No, I’m not saying that. I’m likely done replying to comments but I’m hoping in some of the replies here that I clarified what happened.

@TheRealJFeld @WallStreetApes Are you saying that the winner of the auction, had there been one, would have had to assume the note? Strange that the auction price wouldn't include that.

It sold. Someone bought the loan on a failing property. For legal/functional reasons they held an auction in order to formally foreclose and then take the property. The rules of the auction were not attractive to the market, so there wasn’t participation. The new owner is the group that bought the loan and then held the auction, Lone Star, who paid $130mm. Btw, I reject your contention that “anything else is just blah blah” and means the OP is correct. However, I’m not sure it matters. Hope I could help.

@TheRealJFeld @WallStreetApes Sorry please specify what is the bottom line - did they sell or failed to sell? What was the highest bid? Who is the new owner? Anything else is just blah blah and means that the original post is correct in specifying that the property did not sell for the market price.