Jay Dauphinais owns commercial industrial centers in the Bay Area, leasing space to businesses. Most of his tenants aren’t big firms. They’re lean, service-oriented companies in their earliest days, when they’re still figuring their business out.
JAY:
I call it incubator space. It’s entry-level commercial. They’re home-based businesses that finally go out and lease something because they get tired of running the business out of their home, and they need some place to store supplies, or they need some place to take deliveries.
It’s management intensive. We deal with a lot of startups. There’s always stuff going on.
When there are larger businesses in one of Jay’s office parks, it’s usually because they started leasing from Jay years ago and stayed as the business grew. One tenant was with Jay for about 18 years.
JAY:
He started in one suite, and when he left he was in six suites.
The dynamics of Jay’s business are fascinating: Because he’s leasing to entry-level businesses, every lease agreement is essentially a calculated bet on the success of that business. He has to evaluate each tenant’s business plans and think about whether they’ll still be able to pay rent a year or two down the line. If he doesn’t think a business has long-term potential, he doesn’t rent to them: It’s too risky.
JAY:
A lot of people—they can be great contractors, they can be great mechanics, but they might not be the greatest businesspeople.
It means Jay has a front-row seat to the entrepreneurial ambitions and efforts of all his tenants.
JAY:
I’ve said many times, I live vicariously through the success of these small businesspeople. I’ve counseled many of them. Even counseled them when they sell their businesses: “Hey, you need to do this, you need to do that.”
He generally takes a hard line with rent. But during the early days of the COVID-19 pandemic, when California imposed strict lockdown regulations, Jay offered rent deferrals. He also tried to help tenants figure out how to continue doing business.
JAY:
We had a gym, and they really struggled. We tried to bring some of the gym stuff outside, and we had an agreement for how rent would be structured.
But we were blessed during the pandemic, primarily because of the size of the tenants—meaning they didn’t have a huge operation.
The tech industry has brought an influx of ambitious, hardworking people to the Bay Area and pushed commercial activity out to the suburbs, where Jay is.
JAY:
Tech has brought in a lot of very bright people from other countries. A ton of small businesspeople. And I think that’s fabulous. Those that are entrepreneurs, that can fend for themselves—it’s a blessing that they want to come here and start their businesses.
Jay’s originally from Illinois. Neither of his parents had college degrees.
JAY:
My dad was a carpenter. He was self-employed. He had his own business. Then he went to work for the Chicago Fire Department and became a full-time fireman. My mom had secretarial jobs.
Jay put himself through college, got a business degree in finance, and was in a PhD program for economics. But he decided against finishing his PhD.
JAY:
It was like, “I want to go out and do stuff.” I worked all my life. And I was always an entrepreneur.
PLF:
Did you always have the same view of government power, property, and freedom?
JAY:
I always believed the government should let entrepreneurs do what they do without too much red tape. And being in economics, that capitalist system is the best system in the world. It’s provided the best standard of living for all classes. In particular, we have a middle class. Most countries don’t have a middle class. You’re either poor or the elite and there’s not much in the middle. The United States has got the largest middle class by far, and that came about through capitalism. Here, you can create a business providing a service to other people.
He’s been working in California real estate since 1976—the same year, incidentally, the state legislature made the California Coastal Commission a permanent agency, giving it extraordinary power to regulate and block development of 1.5 million acres of land.
JAY:
The California Coastal Commission became a big gorilla. They were anti-doing anything. You couldn’t build a garage on your property. It would take you forever to get a permit. If you had land on the coast, you had to go through huge hurdles to get anything done.
He married his wife in 1979 and got her into real estate too. To Jay, real estate just makes sense.

JAY:
Property ownership and property rights have been at the forefront of my thinking since the ’70s.
It’s real basic. Land is a fixed commodity, and inflation always exists to a greater or lesser degree. Coming from the hyperinflation of the late ’70s and ’80s, it was clear from the get-go that real estate would be a long-term, good place to invest.
In fact, I used to have a motto very early when clients would ask me about owning real estate is, I earn more money buying real estate than selling real estate as a broker. And that’s forever been true.
Because he was in California, things didn’t always go smoothly. In the 1980s, Jay and his wife tried to develop a piece of property on a main drag next to a freeway. They had a tenant lined up. But the city wouldn’t approve their project.
JAY:
Everything was right. The zoning was right. But the newfound city had recently adopted a redevelopment plan.=And so they didn’t have their legs yet, and they thought, “This is suburbia.” Nobody did any economic analysis of it. These are planners, right? These are supposed to be idea people.
And so we spent a lot of money, at least 30 to 40 grand, which was a lot of money back then. With the tenant in hand, we couldn’t build.
I understood how unfair a de facto taking could be
He used to manage residential properties, but California has made it increasingly difficult to be a residential landlord. For one, evicting a residential tenant is near-impossible—which means choosing the wrong tenant can ruin you.
JAY:
One developed an attitude that it’s better to leave a suite or a house vacant than to put in any remotely questionable tenant.
California’s very anti-landlord. It’s probably one of the most anti-landlord places other than New York City. With all the new legislation they pass every year, California has gotten to the point where it’s controlling so many parts of residential property management.
My wife and I used to have a lot of residential properties. And I’m glad we’ve been out of it for a number of years.
Starting this July, residential landlords will have an even tougher time: California passed a new law that caps residential security deposits at only one month of rent.
To Jay, it’s clear what that means.
JAY:
Every tenant in the world is going to get down to the end and say, “Well, use my deposit for the last month’s rent.” If there’s damage, you have nothing. It shouldn’t be that way.
The new law is especially bad because California also restricts how much information landlords can get on prospective tenants’ histories. PLF tried to bring this issue before the Supreme Court earlier this year, in a case challenging a Seattle ordinance that forbids property owners from considering tenants’ criminal histories. The ordinance “threatens the safety of rental owners, their families, and tenants by depriving owners of their right to exclude dangerous ex-convicts from occupying their homes and sharing intimate spaces,” PLF’s cert petition argued. The Supreme Court declined to hear the case.
Jay brought up another PLF case in Alameda County, California, in which property owners Sheanna and Karl Rogers got stuck with a violent tenant who threatened them and other tenants. Alameda County’s eviction moratorium prevented Sheanna and Karl from evicting the tenant. It’s a property owner’s nightmare, fueled by restrictions on what landlords can know and do. What happened to Sheanna and Karl struck Jay as deeply unfair.
JAY:
You can’t see tenants’ previous evictions anymore. You can’t figure out whether the prospect has a criminal record. Well, if you’re managing an apartment building, you certainly would like to know if this guy beat up his wife or has some felonies against him. You’ve got to know that. Because you as an owner or manager are responsible. How can you be expected to put this guy into your property?
That’s government intervention. I think that’s absurd. It’s interfering with business, the normal course of prudent business.
Jay started giving to PLF after learning about the firm in the mid to late ’90s.
JAY:
Once I knew about PLF and their litigation against the overreach of government on private property rights, I was determined to support them.
I’m thrilled with the work that PLF does for the defense of property owners and property rights.
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