Booming job growth in certain areas of the country is changing multi-housing development. One example is Silicon Valley, where tech companies continue driving the region’s employment growth. While thousands of new jobs are added year-after-year, the housing supply is unable to keep pace with the demand. According to a San Francisco Chronicle report, Mountain View added more than 17,000 new jobs between 2012 and 2015, but only added 779 new housing units. In response, a new developer trend is emerging: Silicon Valley companies building housing for area employees.
Facebook started the housing development trend with its 2013 announcement of the Anton Menlo project, now nearing completion. The 394 multi-family units are within walking and biking distance of the company's Menlo Park headquarters. The development will offer studio apartments and one- to three-bedroom multi-housing residences leased at market rates to Facebook employees. Fifteen percent of the units are reserved for non-Facebook employees and low-income housing. Anton Menlo includes other urban lifestyle amenities like a sports lounge, pet spa, gym and swimming pool. This foray into commercial real estate development is only the beginning; Facebook has proposed a total of 1,500 units on property purchased in the Menlo Park area.
To assuage fears its expansion will intensify the housing crunch, Facebook announced in late 2016 it will spend $20 million in East Palo Alto and Menlo Park to fund new affordable housing in the area. The funding is in addition to its real estate development plans.
Google's parent company, Alphabet, recently submitted a proposal for a 330-unit multi-housing development in East Whisman, California, to address housing needs near its Mountain View headquarters. This particular development would not limit housing to Google employees but prioritize the units for people working in Mountain View. The initial project 3.9-acre development proposal included office space and restaurants.
This is not the first time Google flirted with building housing. In 2015, the company’s vice president of Real Estate, David Radcliffe, suggested the tech giant considered constructing 1,800 apartments in the North Bayshore area. That same year, Mountain View City Council rejected an office space expansion plan for the area that included Google building 150 housing units. The company has invested in other affordable housing units including $6.5 million in a 51-unit Mountain View complex in 2013.
To accommodate the limited available space and high demand, multi-housing units have reduced in size. On the West Coast, the average housing unit size is around 919 square feet. That size was generous, particularly in San Francisco where many Silicon Valley tech employees commute to and from. Starting around 2011, the city responded to the Silicon Valley housing crunch by opening the doorway for micro-unit apartments, pioneering a new urban housing trend. The affordable housing solution pushed developers to think creatively about tiny spaces that range between 250 and 350 square feet. Location matters for micro units, as this style of living works best for people who don’t spend much time inside their apartment. Individuals living in these small spaces want to be close to grocery stores and other urban amenities. Other large cities like New York and Boston have followed San Francisco and added micro-unit housing to address urban housing affordability.
The Wall Street Journal estimates Silicon Valley has a 22,000 housing unit shortfall. Expensive housing has pushed development into other urban areas like Seattle, now experiencing a housing shortfall and rapidly rising prices just like the Bay Area. With Facebook and Google leading the way, it’s possible other tech giants could join the trend addressing affordable housing for all as a way of enticing and keeping talent in these tech boom towns.