Dotcom backlash hitting the 'burbs

Some in San Mateo, Calif. -- near to the heart of Silicon Valley -- believe an invasion of dotcoms could destroy the character of their downtown. Napster's Sean Fanning didn't help.

A Silicon Valley community is considering a ban against dotcom offices in its downtown area, concerned that Internet companies are crowding out shops, eroding its small-town character and driving up prices.

Officials of suburban San Mateo, Calif. -- on the northern fringe of Silicon Valley -- are considering a temporary moratorium on retail-space conversions, having seen intense interest among Internet companies to convert five vacant retail spaces into offices.

The action symbolizes the increasing love-hate relationship between cash-rich (but profit-poor) dotcoms and the communities where they're located. City leaders love to fill office space with new businesses but balk at the resulting increases in commercial rents, home prices and traffic.

Other signs that a dotcom backlash is occurring:

In San Francisco, a group of protestors took to the streets Tuesday night in the city's largely Hispanic Mission District to protest the closure of a dance studio. The space will be used by a dotcom willing to pay much higher rents;

Also in San Francisco, voters will consider a November ballot initiative to limit the growth of technology companies in the city;

In Burlingame, Calif., 16 miles south of San Francisco, merchants are upset about plans to widen street parking spots to accommodate the aircraft-carrier girth of the sport utility vehicles preferred by the big-ticket, high-tech crowd.

What marks the issue in San Mateo as something new is that it moves the so-called dotcom backlash from urban centers to the quiet suburbs and nearer to Silicon Valley.

Where San Francisco activists fear the Internet invasion threatens cultural diversity in neighborhoods, the apprehension in San Mateo is that its small-town atmosphere will be washed away by the Web.

"San Mateo County is changing dramatically due to the high-tech revolution, and it's a struggle for these small, suburban towns to maintain their character," said John Horgan, a columnist at the San Mateo County Times newspaper.

"Most people on city councils and planning commissions in these towns are older people. They are not coming from the new-economy perspective. The only things they see are a proliferation of SUVs, million-dollar homes that are tear-downs and Starbucks."

It probably didn't help that Napster co-founder Shawn Fanning, whose company was located in San Mateo until recently, was quoted in the current issue of Vanity Fair as saying that the town "sucks."

Throughout San Francisco and Silicon Valley to the south, the tremendous number of Internet startups has created a huge demand for office space. Office vacancy rates are below 1 percent in many areas.

So downtown San Mateo has become a potential battlefield, as Web companies try instead to take over vacant spaces once occupied by restaurants and clothing stores.

"Retail space is cheaper than office space here, and the dotcoms sweeten the pot (to landlords) by agreeing to pay more than retail prices for their space," said Jay Bartmann, a commercial real estate agent.

Concerned about a possible Internet invasion, the San Mateo City Council is scheduled to consider a 60-day moratorium on Sept. 5.

The issue came to roost for city planners after Net B2B startup took over the city's high-profile Jud Green building, a former clothing store crouched in the heart of downtown. Ironically, the building has experienced several periods of long vacancies.

While offices don't contribute as much to city coffers as retail shops, there are some benefits, columnist Horgan said. "The employees in that new company at Jud Greens are going to have to go to lunch, and that is only going to help those (nearby) restaurants."

He said the call by some for a total ban on retail conversions in the city was "absurd."

"The key is to find a balance, a fair balance."

San Mateo officials did not return phone calls.