Name:

Type of Teacher:

Year Completed:

Assignment Commentary:

Theodore

English - Ken Ralston

2002

This is a short excerpt of a transcript that we typed up for an English project.

Interview with Mark Best

What do you think are the determinants of commercial real estate prices in San Francisco?

Mark Best: It's quite similar to residential real estate in that location which still affects things more than anything else, such as where your employees live. But if you're [in] industrial, freeway access is quite important. If you're an employee who lives in the city or commutes, it also becomes quite important. If it's related to overseas imports or exports, proximity to the port is important. Once you have location of the way in San Francisco, what's more important in many other locations is concrete versus brick, concrete versus frame. What can withstand the earthquakes, as you know, there are seismic upgrades needed for brick, and then you have dock-loading heights, ceiling heights, three-phase power, and the water supply? The dot-com company, for instance, need T-1 lines. There are a lot of variants, but the old ones still stay true. Location and size, whether it's open-spanned, whether it's older and has support beams or whatever.

How do you think venture capital has affected the real estate market?

Mark Best: It's very hard to isolate by themselves in the effect of the dot-com boom. They were obviously the ones behind the dot-com companies being able to sign leases for $16-70 a foot a year. If you go in there, and you're a startup back in 1998 or 99, and you have an idea, you don't have clients, products or manufacturing. A landlord looks at your credit worthiness, profit loss sheets and history, but you have almost nothing to give to that landlord. But in the frenzy of 1998-99, you say, ok, we have capital backing from venture capitalists for $25 million. Will you sign our lease with first and last month's and security deposits and these people behind us? Well when those people run out of money or they have a burn rate, that money goes away and the landlord looks at it again. Ok Who are you? Where have you been? What do you make, what have you sold? Do you make more money than you spend? And they don't have a venture capitalist. Obviously, that lease in not signed. But, the venture capitalist didn't cause, nor are they the result of the dot-bomb. They're an integral part of it, but they don't, today, affect it because that money is gone.