Back in 1996 when I moved to SF Bay Area from NYC after graduating with my MBA, South Bay (“Silicon Valley”) for technology companies, San Francisco for financial services and the Peninsula was a convenient place in between SF and South Bay that had Oracle and some other companies here or there. We chose to buy a house in mid-Peninsula and establish roots here nearly 20 years ago largely due to providing maximum career flexibility in being equidistant between SF, San Jose and Oakland with easy access to all 3 airports.
Circa 2018, San Mateo County is hot with major technology companies and venture funded startups taking on commercial leases of significant square footage with the many new commercial developments around towns. For example, Redwood City is headquarters for Box, Shutterfly, Equinix and many start-ups. Having more and more companies settle around here bodes well for employment growth, and desirability of living nearby to lessen commute times. How does the real estate future look further down the road in 2023? Two big names – the proverbial 800 lb. gorilla: Google and Facebook.
20 years ago, Mountain View (“MV”) was far less desirable city to live in than nearby Cupertino, Palo Alto or Menlo Park. I had a friend who relocated to Bay Area in 1997 and shared a rental house in Mountain View. The house wasn’t great, the neighborhood was questionable and there was nothing to do nearby. Since Google started expanding ferociously in MV with employees working very long hours, people wanted to live nearby work. Then, after Google went IPO in 2004, many employees suddenly was flush with cash and started purchasing real estate; Mountain View started really catching up in pricing metrics to its more expensive neighbors, then more and more nicer restaurants, bars, retail began opening up rendering MV even more desirable. Now Mountain View is an expensive city to live….and that aforementioned starter home in MV would probably sell for close to $2 million. The “Google Effect” on residential real estate.
Menlo Park has always been a highly sought after city with fantastic schools, proximity to Stanford and accessibility to South Bay. Once Facebook exploded on the scene, that had a ripple effect on East MP, Redwood City and even across the Dumbarton Bridge into Fremont and the likes (no pun intended). The current MP headquarters had previously been the HQ of Sun Microsystem, so the incremental impact didn’t have the same boom that Google had on MV. But when FB prior to its IPO, I know that they offered a housing stipend to anyone who lived within some miles from campus given the long hours employees were working to change how the world communicates through social media.
So in 2014, Google purchase approximately 1 million (pinky pointed to mouth emphasizing the M) square feet at Paciific Shores in East side of Redwood City. The offices were mostly leased up, so it would take some years for Google to vacate some tenants, do tenant improvements to Google standards, and then slowly move into the buildings. See link for details. https://www.bizjournals.com/sanjose/news/2014/10/03/google-to-buy-big-chunk-of-pacific-shores-iconic.html. Additionally, Googles rapidly growing Youtube business unit out of San Bruno has been aggressively purchasing office buildings in San Bruno just off the 380 freeway to expand growth at Youtube too. The price appreciation in San Bruno will also be interesting for those buyers who can afford more house in SB than in Burlingame, Millbrae, San Mateo or for those who work at Youtube or in South SF where many biotech firms exist.
The impetus for this article stemmed from recent news that Facebook was close to negotiating around 800k square foot of new commercial space in tony Burlingame. This would greatly affect the mid-Peninsula as FB fills this space with employees. https://news.theregistrysf.com/facebook-eyes-burlingame-with-800000-sqft-lease-at-kyllis-burlingame-point-development/ We won’t observe the direct impact on Peninsula real estate prices in the near term. However, as referenced in previous articles, land is in very short supply in the mid-Peninsula to build new residential housing units, while it appears that we will see greater demand in the medium term future.
Many analysts believe the housing boom is nearing an end in the next 2 years – but I heard the same scuttlebutt and “analysis” 2 years ago too. What do you all think? Do you think there will be a Google/FB effect in next few years? Or do you think the greater economy might eventually soften before that and lessen their impact? How about those of you who live outside the SF Bay Area, have you observed cities impacted by growth of a particular company or industry?
As always, feel free to email me at firstname.lastname@example.org if you wish to discuss/brainstorm SF Bay real estate. Be sure to like my FB Page at https://www.facebook.com/PeterTaoProperties