Neil Mehta, the venture capitalist behind the acquisition of a string of properties on San Francisco’s upscale Fillmore Street, caused a stir earlier this week after it was reported that he was abandoning long-standing local restaurants in favor of more upscale retailers. For example, the San Francisco Chronicle spoke to the owner of Ten-Ichi, a sushi restaurant in the neighborhood for nearly 50 years that is now due to vacate its space next month. “This is the opposite of what San Francisco does to long-standing commercial tenants,” the restaurant’s owner told the paper. “This guy [Mehta] He is Our displacement“.”
But sources close to Mehta paint a very different picture. They say Mehta is primarily focused on bringing a large group of restaurants to the area, and is even planning to create a kind of “Y Combinator for restaurants,” one source said.
According to this person, Mehta has a grand vision for turning the roughly four-block lot he quietly acquired over the past year into an oasis where aspiring restaurateurs can afford to set up shop, San Franciscans can find a wealth of dining and shopping options, and a 111-year-old movie theater across the street has been restored to its former glory and “not turned into an Equinox.”
Earlier this week, Mehta — who reportedly bought a $17.6 million, 117-year-old, 9,000-square-foot home in 2022 just blocks from his newly acquired commercial properties — declined to speak publicly, saying he only speaks to reporters on behalf of his portfolio companies.
Up and right
Some of Mehta’s plans were first reported by The Information earlier this year in piece Which largely touched on how Mehta, who is much less well-known than many venture capital firms, had so much money to invest in the first place.
It has been a rapid but steady rise for the 40-year-old. A graduate of the London School of Economics, Mehta was reportedly a prominent investor at a branch of quantitative hedge fund DE Shaw before using his reputation and network to co-found his own investment firm, Greenox Capitalin 2010.
Since then, the San Francisco-based firm, which raised its first institutional capital in 2015, has invested in some of the most popular private companies in the tech industry, including Stripe, Databricks, Rippling and Canva — all of which are now valued in the billions of dollars by their backers.
Greenoaks is also an early investor in Wiz, a lesser-known cybersecurity startup until recently, when it rejected a $23 billion acquisition offer from Google. (Wiz, it’s worth noting, was founded just four years ago.)
Now Mehta is investing some of those profits in San Francisco’s Pacific Heights neighborhood, where he largely grew up, through a $100 million nonprofit he created to fund his shopping spree. The apparent plan is not just to remake the Fillmore as a dining destination, but also, as part of that process, to address some of the bureaucracy that many aspiring restaurateurs face, as well as offering them lower rents—and even charging a percentage of revenue in lieu of rent in some cases—to make it easier for these businesses to thrive.
Mehta, his friends say, doesn’t see his growing real estate empire as just another financial bet. They insist his primary concern is ensuring that the San Francisco neighborhood fully recovers from the pandemic, when nearly half the stores on Fillmore Street have permanently closed, according to commercial real estate services firm CBRE. “He’s a big believer in cities,” one source says.
These moves are likely to boost his chances in both cases.
Mehta, on the other hand, mostly avoids so-called “model retailers,” companies with 11 or more locations around the world. While some are in the process of getting conditional use permits, those can take up to 12 months, which is why many of the stores on the tree-lined street currently stand vacant. (Other San Francisco neighborhoods have Forbidden (Entire chain of stores.)
Mehta should also benefit from 100 changes According to a San Francisco planning ordinance passed in December that streamlines the permitting process for independent businesses.
Given his financial strength, Mehta is able to be selective about which businesses he wants to help survive, too, compared with previous individual building owners, who may have had less choice about who pays the rent.
Mehta doesn’t buy his buildings. at a cheap priceFor example, he acquired the street theater and an adjacent commercial building for $11 million, compared to the $4.8 million their previous owner paid in 2008. He paid $9.7 million for a separate 7,300-square-foot building, or $1,329 per square foot. Still, it’s easy to see how all the pieces—buying the buildings, leasing at below-market rates to reduce turnover—could create a more vibrant scene that would increase the value of Mehta’s properties over time.
Many shopping districts succeed when they are carefully planned, says Alex Saguis, a senior vice president who leads CBRE’s urban retail team in San Francisco. “You don’t want two coffee shops next to each other,” he says. “But if you take a bakery and put a coffee shop next to it, business can boom.” Likewise, he says, “every winery in Sonoma makes it more attractive.”
As for the fine dining that may soon be popping up everywhere on Fillmore Street, the risk of exploitation is less than one might think, says Saguis. “People go for an experience. You don’t show up and then decide between a food and drink combination.” [a salad restaurant] or [the three-Michelin-starred restaurant] He added that the more densely populated an area is, the more people will come to it.
Mehta’s moves may have already impacted the market.
Although Pacific Heights has long been among the most expensive and sought-after neighborhoods in San Francisco, home values have plummeted during the pandemic. Now, according to Redfin, the median home price in Pacific Heights is rapidly rising again, reaching $1.2 million. $2.25 million In July, an increase of 28.6% year-on-year.