San Francisco Hangout Becomes Casualty of Tech Boom

Since 1999, The Grove restaurant, with its warm, woodsy interior and comfort food, has marketed itself as “San Francisco’s living room.” Its customers, who have a habit of lingering for hours, seem to agree.

That year, The Grove opened its flagship restaurant on Chestnut Street, in San Francisco’s tony Marina district, where Brian Wilson, the Giants’ quirky, former closer, is occasionally spotted completing crossword puzzles in a corner and disheveled techies, who keep late hours, come for the all-day breakfast.

The Grove acquired such a following over the past decade that its owners have opened three more locations around the city. But they recently announced that they’ll be closing the Chestnut Street location because of untenable rents â€" driven up, in large part, because of the well-paid techies who chow down on its huevos rancheros every day.

This year, the landlords raised the annual rent to $246,816, or roughly $20,000 a month, for the 1,500 square foot ground floor space. That is 50 percent higher than what The Grove’s owners paid five years ago. They said the only way they could possibly keep pace would be to drastically raise prices.

“It’s such a unique restaurant â€" it has an amazing product, a well-priced product â€" and it’s upsetting to think that their business model can no longer survive,” said Katie Spalding, a local interior designer. “To pay rent, they’ll either have to have astronomical prices, which will drive away customers, or go out of business.”

“It’s our favorite brunch spot,” Ms. Spalding added. “It will be really sad if it becomes just another bar.”

Regulars complain that The Grove’s planned closure is just the latest confirmation that the tech boom is making San Francisco unlivable, and pricing long-time businesses and residents out of the market. As start-ups and established tech companies like Google, Facebook and Square poach one another’s engineers with high salaries, rents are, on average, up almost 8 percent from a year ago, to $2,768 for an apartment in a large complex, according to RealFacts, a Novato, Calif., company that tracks real estate prices.

According to a report last month by the National Low Income Housing Coalition, 4 of the 10 most expensive housing markets in the country â€" San Francisco, San Mateo, Santa Clara and Marin counties â€" are in the greater Bay Area. Even Oakland, once a cheaper alternative to the city, saw average rent surge 11 percent in 2012 over the previous year.

Those lucky enough to live in rent-controlled apartments say they fear that they can never afford to move. Those who are not so lucky say the rent increases have left them with little choice but to leave the city.

One apartment seeker, Melissa Jensen, said she recently moved from Los Angeles where she paid less than $2,000 for a one-bedroom in a nice neighborhood. “To get that same space in San Francisco I’m realizing I’m going to have to pay twice that much,” said Ms. Jensen, who is working to open a Northern California branch of The Help Company, a Los Angeles-based boutique staffing firm.

She compared apartment open houses to “cattle calls.” She said she had offered to pay one landlord six months rent up front, thinking that might do the trick, but he told her she was competing with others who were already in an all-out bidding war for the space. “There are young people with disposable incomes who make over $200,000 a year who are willing to pay whatever it takes,” she sighed. “It’s impossible.”

The Grove’s owners are looking for alternative locations in more affordable neighborhoods â€" if those still exist. But back on Chestnut Street last Friday morning, most of their patrons seemed oblivious to the impending closure. They were busy talking tech and, it seemed, too engulfed in the huevos rancheros.