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Thursday, October 27, 2011

The Downside of San Francisco's Restaurant Boom: Higher Rents?

Posted By on Thu, Oct 27, 2011 at 8:26 AM

Michael Mina: One of the barons of the new Golden Age of restaurants. - DREW ALTIZER FOR FINANCIAL TIMES/FLICKR

Twenty-five-year-olds are cramming into closets again as apartment rents have spiked, declares this month's San Francisco magazine, thanks to a tech boom in the city that defies the national recession.

Now Bloomberg Business News reports that the same thing may be happening to the city's retail real estate market -- thanks to the proliferation of restaurants that papers like us have been calling a new "golden age" of dining:

Almost 300 eating, drinking and food-related establishments have opened in the last two years, spurring a surge in demand for street-level real estate, according to Cushman & Wakefield Inc. The retail vacancy rate, already the lowest in the U.S., will drop further and rents are poised to rise as more businesses seek space, said Ryan Severino, senior economist at research firm Reis Inc.

As one property manager tells Bloomberg, "People are giddy about seeing the new concepts being developed by chefs and restaurateurs who already have a huge fan base. ... They're very competitive businesses with extraordinary expectations." Uh-oh. "Giddy" ... "extraordinary expectations" ... what other booms have we heard described in those terms before?

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