Happy Friday. This is The Shake 🤝: the weekly newsletter pulling back the curtain on historic real estate stories.

Here’s what we got this week:

• The Billion Dollar Bridge 🌉 

MARKET RADAR

The Billion Dollar Bridge 🌉 

Few metropolitan areas have been blessed with more natural advantages than the San Francisco Bay region. The rich valleys, natural harbor, and mild climate make it a home and attraction to millions of people.

But along with those blessings, were some complications…

SF is a peninsula, making it somewhat tricky to get in-n-out 🍔 from (pun intended). Back in the early 1900s, the only way to and from the city was either by ferry or through the south bay - making transportation a real pain in the a**.

Soon the automobile took the country by storm and the ferry rides that were designed for passengers could not accommodate the rapidly growing numbers of car owners. In 1917, over 600,000 auto-ferry trips across the bay were completed. Ferry owners tried to retrofit the vessels but it wasn’t enough, demand was too high and congestion was intolerable.

Cars were the kickstart to a new era in the United States and residents in the bay area knew that a transportation revolution was needed to replace the ferry boats with bridges.

It was time for an upgrade of infrastructure…

So, right as the Great Depression emerged, the city began dedicating funds and resources to bridges connecting the SF peninsula to its neighbors. The Dumbarton and Bay Bridge were first on the roadmap along with the now iconic Golden Gate.

Get this: the idea of a bridge across the Golden Gate Strait wasn’t new - it was lingering since railroad mogul Charles Crocker first proposed it in 1872.

Decades later, in 1919, San Francisco officials asked City Engineer Michael O’Shaughnessy to explore the feasibility of such a bridge. Despite skepticism from engineers that it would cost over $100 million, Joseph Baermann Strauss suggested it could be built for $25 to $30 million.

Strauss presented his preliminary sketches in 1921 with a cost estimate of $17 million for a cantilever-suspension hybrid design. O’Shaughnessy took a year and a half to reveal the design publicly.

During this time, Strauss actively promoted the idea, convincing civic leaders it could be funded by toll revenues alone (more on this shortly).

When the design was finally made public in 1922, there was little opposition from the public, despite some criticism of its appearance.

Now it was time to pony up the money.

Unlike the other bridges, there were actually no state or federal funds involved in building the Golden Gate.

The city had to issue a Bridge Bond and have residents of the six-member counties vote on the question of whether to put up their homes, farms, and business properties as collateral for a $35 million bond issued to finance the construction.

As you can imagine, there was a slew of legal battles fought to get the bond issue underway. In 1930, 145k residents voted in favor while 46k voted against - giving the ultimate go-ahead for the project.

Construction began in 1933 and was completed in 1937 without going over budget (take notes developers). 

The total length of the bridge is 1.7 miles and spans about 4200 feet with a 90-foot wide deck. It’s lifted 220 feet above the water for vessels to pass through and the high winds mixed with dense fog made it a nightmare for safety officers.

At that time, the bridge industry’s deadly average was one fatality per million dollars spent on a construction project. Stunting and dancing on cables became a force of habit for workers on the job… can you imagine if they had TikTok back then?

The “Bridgemen” workers were the true daredevils of this era and Strauss was determined to find solutions to keep them safe.

Safety lines and even a $130k safety net were constructed to provide these workers with the confidence to move quickly. They also created the first hard hats made out of leather.

These safety standards sped up construction by 3-4x.

By completion, the net saved 19 men (the “Halfway-to-Hell Club”) while 11 men tragically died (10 lost their lives when a section of scaffold fell through the safety net).

Fast forward a couple of decades and turns out Strauss was right. The last of the construction bonds were retired in 1971 – with $35 million in principal and $39 million in interest paid entirely by Bridge tolls.

They did this all without Excel modeling… not bad 👍️ 

Let’s put on our appraiser hat and value what the bridge is worth today.

Serving over 100,000 daily commuters the Golden Gate Bridge clears about $145M in revenue a year through tolls. Not to mention, it annually attracts over 10M visitors which translates into other revenue streams for the city.

It appears that the district spends about $85M in annual maintenance, turning a solid profit of $60M a year.

Now I'm not in the bridge business, but something tells me the investing community would throw at least a nice 6 cap on an investment like this. That would bring the total value of the bridge to a minimum of $1 billion dollars.

Some would say this is well below replacement cost as estimates show the bridge would cost ~$10 billion to build today.

As we inch closer to 100 years since this engineering feat, the iconic Golden Gate Bridge serves as a reminder of what the American West epitomized in the early 1900s - hustle, innovation, and speed to creation.

Now it takes California 20+ years and over $100 Billion to build a bullet train from SF to LA.

One last crazy fact: the bridge can move up and down by as much as 16 feet due to temperature changes. Almost like a daily thermometer…

FIN 🤝 If you enjoyed this week's edition, don’t be selfish — share with a friend!

^{DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.}