IPO and SFO

Sounds a bit like a robust airport code, or two of them at least.  Although the city may have to ultimately build another airport if this accelerated wealth trajectory continues, as things are already 10x more crowded (and pricier) for just about any place or thing.  Waitlists at restaurants, traffic, longer lines everyone – it’s only going to continue.

Lots of talk about the big year of IPO’s hitting the San Francisco market this year – Uber, Lyft, Slack, Airbnb, Pinterest and Postmates all are due to splash the public markets. There is no question there will be impacts, socially and financially, to the city and its surrounding areas.  Just how much of an impact and whether all of it will be good/bad is where you get some different opinions.    Even on the conservative scale, there will be hundreds of millions of dollars flooding into the city and with that will be many more millionaires.  Most of them very young (under the age of 40) and many will be ready throw money around like a Biggie music video.

Food and beverage industry certainly stands to make out well, right?  Yes, of course.  Retail, in general, should continue to thrive here in the city, as well, with people ramping up shopping habits for luxury items like watches and shoes, to revamping their entire wardrobe of casual-but-overpriced-clothing (the new “suit” in the tech industry).  What about real estate?  Surely it floods the market with more buyers and frothy-mouthed sellers, right?  Most likely, in both cases.

Already there are plenty of sellers that have pulled unique properties off the market that maybe had a tougher time selling, with visions of selling them to a millennial that doesn’t mind that the home is not suited for a family, etc.  Some pulled them in hopes of bringing a higher offer price out of would-be buyers if they simply stay patient for another year.  As for buyers, they will be flush with cash and naive (in a good way) to real estate leverage and simply pay what they need to in order to get the place they want.   This equation means a real estate market that goes from being strong to even stronger.  Like, “steroids” stronger.

It is no forgone conclusion, though that every IPO hits it out of the park and has a subsequent ripple effect of economic and real estate euphoria.  Remember SNAP and Groupon?  Both hyped as public splashes that would go down in history, but they ended up doing so for the wrong reasons, with ultimately neither having any major impactful touch on the markets.    As well, one must consider the lock-up periods that shareholders of these companies are attached to.  With many of them for nearly half of a year, it comes down to the company continuing to post positive news, growth, and (dare I say it??) a PROFIT.  So, while going public is a great thing and is to be celebrated in the free market and for its ingenuity, it is not always a sure bet that it pans out.

Let’s watch and see this year, but there is no question that the market (real estate) is going to benefit, regardless of what happens.  It will just be a question of how much.

 

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