Tech boom pressures Silicon Valley housing and transportation

It’s a familiar refrain: A tech boom in Silicon Valley — one that this time is poised to take the tech region to record peaks of employment as well as population levels — is putting pressure on housing prices and the congested transportation networks in the Bay Area.

The Wall Street Journal was the latest to weigh in on this long-running issue, now front and center with a proposed office boom in Mountain View, expansions of big business parks in Sunnyvale, new development in Santa Clara, and a push to develop office complexes in north San Jose.

Yet the current technology surge in the Bay Area, which has really taken off in Santa Clara County, San Mateo County, San Francisco, and to a lesser extent, in Oakland and Fremont, is coning during what could be a milestone year for the South Bay economy and job market.

“We have phenomenal growth,” said Russell Hancock, president of San Jose-based Joint Venture Silicon Valley. “We seem to be on pace for record job growth. Silicon Valley, defined as Santa Clara County, San Mateo County, and Fremont, is about to hit 3 million residents.”

Santa Clara County, as of March, had 1,044,900 payroll jobs — just 30,700 below the all-time record peak of employment of 1,075,600 jobs that the region set in December 2000. Put another way, Santa Clara County is only 2.9 percent below its record employment peak.

The current job totals, measured by the state’s Employment Development Department, is at a 14-year high, the best level since April 2001. That’s roughly the time when the dot-com boom had begun to collapse.

This time though, the job boom is not being met with open arms in some quarters in Silicon Valley.

“The anti-growth sentiment is definitely a concern,” said Phil Mahoney, an executive managing director with the Santa Clara office of Newmark Cornish & Carey, a commercial realty brokerage. “If we want to over-regulate and become Detroit, we could do that. I’m sure we could become bureaucratic enough that we could force companies to go elsewhere. I hope it doesn’t happen. I don’t think it will happen. But it could happen.”

Efforts are underway to attempt to keep the proverbial Golden Goose from choking on its own success.

“Growth is not a four-letter word,” Mahoney said. “We can solve this problem with smart expansion.”

More developers are proposing — and getting approval for — office towers to replace the sprawling low-slung research and office buildings that characterized the multiple tech expansions of recent decades. A growing number of projects aren’t simply being placed on the next available street corner, they are being built near existing and future rail transit stops, including future BART lines. The high-rise offices also are being embraced by a younger generation of tech engineers who prefer a more urban lifestyle, both at home and in the workplace.

“More tech companies are willing to go into six- and eight-story office buildings that they weren’t willing to do before,” said John Yandle, a managing director with Cornish & Carey.

Plus, some projects are accompanied by proposals for retail and high-density residential, or the developments are being placed near existing housing and stores, such as offices being built or planned for north San Jose.

Proposals by technology companies such as Google and LinkedIn, along with an array of developers, to build 5.7 million square feet of offices in Mountain View north of U.S. Highway 101 have put the spotlight on the Bay Area’s ability to cope with its growing pains. To underscore the pressure, Mountain View intends to approve no more than 2.2 million additional square feet on the north side of town.

The office development squeeze is also underway in Palo Alto, home town of Hewlett-Packard; Cupertino, where Apple is based; and San Francisco, where Twitter and Salesforce have their headquarters.

Yet as tough as the challenges are for Silicon Valley, the natural innovative spirit of the region makes it an ideal place to attempt to surmount the obstacles.

“We will have drones to take delivery trucks off the road, we will have driverless cars, we have ride-sharing services like Uber,” Hancock said. “We will become more of a region of renters rather than home owners, and people will get used to living in smaller spaces.”

Experts also say that Silicon Valley by its very nature has been able to re-invent itself and may be able to do so yet again.

“Somehow Silicon Valley has stayed resilient and will continue to do so,” Yandle said. “The sun is shining, there are good universities, it’s a great place to live. As one industry group goes away, we see three or four more tech industries move in to take its place.”

 

Google is one of the companies eyeing huge expansion plans in Silicon Valley, including a new headquarters complex. (Photo by: Patrick Tehan/Bay Area News Group)

 

 

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  • John Victor

    The clock is ticking on when all of this will end. This happy news stuff is annoying given that we’ve had growth in SV in decades past only to see it come crashing down and harder each time. Jobs go overseas and buildings and homes become empty again. I’m not posting this to darken everyone’s days. It’s what has happened in the past and given the global way by which tech business is being made, will absolutely happen yet again. So…hold on to your hats and, everyone, start thinking LONG TERM when it comes to your job, your place to live and what your financial future will be like. We, as Americans, certainly can’t and should not rely on SV business leaders to stick around especially when it comes to making $$$ using cheap, willing overseas labour (that they use as indentured servants here or hire outright for a pittance overseas).

 
 
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