Viewed a certain way, life resembles a Vegas sports book — its dramas have at least a few winners; not everyone loses. Covid-19 is no exception. The airline industry is on the tarmac, but RVs have never been in greater demand. Public transportation has a flat tire, yet bicycles can’t be found for love or money. Pharmaceuticals have skyrocketed, while the oil & gas industry is a dry well.

Real estate has its front page winners and losers — Amazon distribution centers on the one hand, enclosed malls on the other — but, unlike many industries, the where, as opposed to the what, often determines real estate’s victors and victims. It doesn’t matter where casinos are — they’re all crapping out. But, unlike gambling, the demand for housing is relatively constant; not everyone can move into their mother’s basement. The question is: Where is that demand?

It’s neither in San Francisco nor Silicon Valley, nor, one suspects, in any of the darling coastal cities that were secular meccas until the virus hit.

I quizzed four Bay Area apartment moguls. One, the owner of thousands of Silicon Valley units, said his occupancy stands at 90% and his rental rates are off 10% from their pre-virus high. Another, the owner of a small but stylish portfolio, said he’d never seen so many intractable vacancies in Palo Alto, and that his rents are down 21% from a year ago. The president of a multibillion-dollar apartment company said his suburban walk-up units were performing close to normal — no more than 7% off —but that his high-rises were down by as much as 25%. (The elevator remains the virus’s biggest loser.)

Finally, the president of a major apartment builder declared the world upside down. He said the Class A urban jewels — the apartment buildings that twinkle on San Francisco’s skyline — are the hardest hit of all, with “real net effective rent” off as much as 25-30%.*


“Because they were occupied by renters by choice. Now, there’s no reason to spend $5,000 a month for a one bedroom,” he responded. “There’s nowhere to go, the city is shut down, and no one has to be anywhere in particular. It’s different for the renters of the B and C properties — they’re stuck.”

Along with New York City, the Bay Area is the big loser in the flight of the techies. Seattle less so, and Denver seems unchanged this year.

And the winners? Pretty much anywhere else in suburban or even rural USA. According to Redfin, Sacramento’s housing prices are up 10.1% year-over-year; each listing gets an average of three offers and “goes pending” within 11 days. Sacramento, go figure. One cannot escape the exaltations about the glories of life in Boise and Bend. And of every other charming hamlet in Montana, Texas and Arizona. (It’s fair to wonder how at home Rockefeller Republicans — let alone Democrats — will ultimately feel in towns where the term “gun control” means using both hands.)

This great 2020 exodus raises the question: Will the techies ever return? Only if the jobs do. Few millennials and Gen Zers will pay $5,000 for Bay views and lingering fog. This means that companies — and their employees — must conclude that working-at-home is akin to having a substitute teacher in high school: It’s fun for a while, but the talented soon weary of learning nothing. It seems to me that those who wish to get ahead — you can’t get promoted from your bedroom — make sales or meet like-minded employees for friendship or just to get the hell out of their sweatpants will demand a real office the day after we have a month of zero infections.

The jobs will likely return to Silicon Valley. Stanford, the stellar nursery for the birthing of technology’s stars, isn’t moving, and startups will continue their toddler and teenage years in Palo Alto and Mountain View. Whether they cross the Sierra once they reach adulthood, as Palantir has fled to Denver, is another story.

San Francisco is also another story. Between the homeless encampments, the constant clamoring for taxing the rich and the pervasive sense that life’s quality has somehow been lost in the progressives’ politics, it may be that the city’s undeniable attractions will appeal only to the downtrodden and the tourists, and that its epoch as a major business center ended in 2020.

*While doing everything they can to immediately lease their units, major apartment owners are wary of Proposition 21 — the November ballot initiative that would prevent landlords from raising rents to fair market upon the vacancy of an apartment. Thus, many owners are achieving today’s market rents by giving away months of free rent, free parking, etc., instead of dropping their pre-Covid asking rents.”