More on the wealthy leaving cities, San Francisco edition

The flight of some out of New York City amid COVID-19 has attracted attention. This may also be happening in San Francisco:

city skyline during golden hour

Photo by Kehn Hermano on Pexels.com

Amid the depths of a global pandemic and financial downturn, the demand for real estate is unexpectedly rocketing in wealthy regions outside San Francisco, reports Bloomberg. Agents say that demand is soaring in affluent areas around the Bay Area such as Napa, Marin and further afield in Carmel, as people who have the means look to get away from the city. Meanwhile, the market in San Francisco and Alameda County is still well below where it was last year.

Elsewhere, Lake Tahoe has also seen a surge in real estate interest. The prospect of living out of the city on an alpine lake while maintaining a career is appealing for a new generation of young buyers, as many tech companies have signaled that remote work may be the new norm for a long time…

Meanwhile, the rental market in San Francisco has dropped significantly, with rates for one-bedroom apartments in the city dropping by 9.2% since June 2019, and hitting a three-year low.

However, buying a new home in an isolated haven in a nearby bucolic county is not an option for lower-income San Francisco residents, and some believe the trend is only exacerbating the wealth divide.

And, as noted in the final paragraph of the story, it is hard to know whether this is a long-term trend. But, this is one of the advantage of wealth and resources: residential options during times when many others are limited in where they can live. And this is not just limited to where they can live; it includes being able to travel back and forth easily, owning or renting multiple properties at the same time, and having all the resources for working from home.

More broadly, the evidence cited above is interesting in that people moving out of the city are not said to be moving very far. They are still within a drive of San Francisco/the Bay Area/Silicon Valley. Are people in the Bay Area more willing to stay close by or do they have to due to work (a need for at least some in the tech industry to be at meetings, see people and products, etc.)? Does this differ from New York City where many of those moving ended up in the suburbs while others left the metro region all together? Staying in driving distance changes the moving experience.

I am also imagining the possibility of a more significant migration than some wealthy people heading for the suburbs or other cool metro areas. What if Facebook said they want to get out of the petri dish of Silicon Valley, be a different kind of tech company that really wants to connect people, and picks up for Omaha or St. Louis or another smaller big city in the middle of the country? Clusters of organizations have particular synergies and efficiencies but if more workers are going to be at home, is there still the same need to locate near everyone else?

Related earlier post: the evidence for this happening in Washington D.C. may not be as strong.

Claim: “The physical environment feels depressingly finished”

As Derek Thompson of The Atlantic considers innovation and Silicon Valley, he includes this paragraph regarding innovation in the physical and urban realm:

And if you look up from your smartphone, progress becomes harder to see. The physical world of the city—the glow of electric-powered lights, the rumble of automobiles, the roar of airplanes overhead and subways below—is a product of late-19th-century and early-20th-century invention. The physical environment feels depressingly finished. The bulk of innovation has been shunted into the invisible realm of bytes and code.

There are several pieces that can be pulled out of this an examined:

1. Has innovation in cities and urban areas slowed? Many of the major changes may have already happened – think the modern skyscraper, the car and all the roads to go with them – but I’m guessing there are some lesser-known changes in the last few decades that have made a major difference. (For better or worst, one would be the global shift toward and innovations in capitalism, neoliberalism, and the finance industry that has had large effects on numerous cities and neighborhoods.)

2. If “the physical environment feels depressingly finished,” does this mean a change in aesthetics or style could alter this? Science-fiction films and shows tend to depict cities as white, gleaming, and move curved than they are today. Think Her which merges city life and technological change. Or, find images of cities from researchers, activists, and architects who imagine much greener cities full of plants and life rather than hard surfaces and cars. Perhaps the problem is not innovation as it is described in this article; one issue is that the look of big cities has not changed much in the fifty years or so (even as some individual buildings or projects might stand out).

3. If the look and feel of cities has not changed as much recently, could “the invisible realm of bytes and code” bring significant changes to the physical environment in the next few decades? In contrast to #2, perhaps future innovation in spaces will be less about collective experiences and aesthetics and more about changed private experiences. Imagine Virtual Reality in cities that allows pedestrians to see or overlay different information over their immediate surroundings. Or, easier access to Big Data in urban settings that will help individuals/consumers make choices.

Would new local taxes on large tech firms really cause them to leave Silicon Valley?

Several communities in Silicon Valley are considering levying special taxes on large companies, possibly affecting some of the biggest tech companies:

Cupertino, Mountain View and East Palo Alto have begun to ponder new taxes based on employer headcounts — levies that could jolt Apple and Google — and if voters endorse the plans, a fresh wave of such measures may roll toward other corporate coffers.

Alarmed by traffic and other issues brought on by massive expansion projects, the three Silicon Valley cities are pushing forward with separate plans to impose new taxes that could be used to make transit and other improvements…

A lot of factors point to this being a prime time for efforts such as these. San Francisco ranked fifth worst for traffic congestion in the world — and third worst in the U.S. — last year, according to INRIX Global Congestion Ranking. Record housing prices in 2018 boosted the median price of a single family home in the Bay Area to a record $893,000 in April, according to a CoreLogic report.

Federal tax cuts also have improved the balance sheets on an array of U.S. companies, large and small. Silicon Valley’s largest tech companies have contributed to the gridlock on freeways and soaring housing costs as they’ve grown rapidly in recent years, with brisk hiring and expansion in unexpected areas and mega-leases that gobble up huge swaths of office space.

If this works the way that some would argue it does, then the local taxes will be viewed by the tech companies as an unnecessary burden for their operations. They should then consider moving elsewhere where they are not subject to such local taxes. Indeed, if they wanted to move sizable operations, they could probably get numerous communities to offer them tax breaks.

However, this assumes that the local taxes are the primary factor that determines where companies and organizations locate. Instead, there are a variety of factors that both support and work against staying in their current location. I assume these are important reasons for why Apple, Facebook, Google, and others are in this location: the construction and maintenance of large headquarters, proximity to other like-minded organizations, an talented employee pool nearby, and the proximity to major cities like San Jose and San Francisco. Are local tax issues more important than these other concerns? Probably not. And even if they are, it would take some time before a large organization could significantly alter their operations in response.

Living inside and outside Facebook and Google’s new developments

Online and physical realms will collide even more in new developments Facebook and Google are planning:

Willow Village will be wedged between the Menlo Park neighborhood of Belle Haven and the city of East Palo Alto, both heavily Hispanic communities that are among Silicon Valley’s poorest. Facebook is planning 1,500 apartments, and has agreed with Menlo Park to offer 225 of them at below-market rates. The most likely tenants of the full-price units are Facebook employees, who already receive a five-figure bonus if they live near the office.

The community will have eight acres of parks, plazas and bike-pedestrian paths open to the public. Facebook wants to revitalize the railway running alongside the property and will finish next year a pedestrian bridge over the expressway. The bridge will provide access to the trail that rings San Francisco Bay, a boon for birders and bikers…

Facebook is testing the proposition: Do people love tech companies so much they will live inside of them? When the project was announced last summer, critics dubbed it Facebookville or, in tribute to company co-founder Mark Zuckerberg, Zucktown

Google will build 5,000 homes on its property under an agreement brokered with Mountain View in December. Call it Alphabet City as a nod to Alphabet, Google’s corporate parent. The company said it was still figuring out its future as a landlord, and declined further comment.

Throw Apple in the mix – as this article does – and these tech companies are doing something unique in Silicon Valley: looking to develop campuses that are around-the-clock and provide housing for employees. Few companies would even think of such a plan and I could imagine many workers would have serious reservations regarding living in facilities provided by their company.

But, there is one distinguishing feature of these new developments that complicate this already-unique story: the particular geographic context in which these physical developments are located. This is an area that already has a tremendous level of inequality with limited affordable housing and some of the poorest and richest living near each other. Tech companies like these three have brought tremendous wealth and notoriety to the area and have also exacerbated issues. What responsibility do these large companies have to the local area? The article mentions Steve Jobs’ claim in front of a local government that a good company is only required to pay taxes.

I suspect physical developments from these companies would be treated differently elsewhere, particularly in places that are desperate for jobs or economic energy. The case of a Google development in Toronto will offer an interesting contrast in how local residents and officials respond. Or, we see what cities are willing to offer to Amazon for a large facility.

Additionally, the idea that corporate campuses or facilities should be open to or available to the public is an interesting one to consider. There are already numerous areas that are actually private spaces that function more like public spaces (think of shopping malls or some of the urban parks that Occupy Wall Street found out were actually private land). But, it is different to ask that an office building or housing for employees also be available to the public. I wonder if there is a company that will lead the way in this and tout the benefits of having employees and the public interact as well as share their corporate benefits with others.

Silicon Valley packing up for New York City and other locations

Google’s plans to open a big office in New York City may presage larger geographic shifts:

Google is said to be close to signing a $2.4bn deal to establish an East Coast base in New York City, the latest in a series of moves by tech firms who believe Silicon Valley‘s best days may be “over”…

If it goes ahead, Google would be among a number of tech companies that are looking to expand their New York footprint. Concerns about the soaring cost of living in San Francisco, and worried that innovation may be accelerating faster in other parts of the country, a number of firms are looking to New York and other cities…

The AP said New York had been pitching itself as an alternative to Silicon Valley for years. While tech may never rival financial services and Wall Street as the most important private-sector employer and economic driver, it has already established a legitimate footprint that goes beyond a handful of giant companies…

The news comes as a number of other tech giants are looking to find alternative locations for investment opportunities and expansion. The New York Times said Robin Li, an investor with the San Francisco venture capital firm GGV Capital, recently led a three-day bus tour through the Midwest, stopping in Youngstown and Akron in Ohio, Detroit and Flint in Michigan and South Bend in Indiana.

On one hand, it is not a surprise that New York City is alluring: it is one of – if not the most – important city in the world with its finance industry, influence, and standing as the leading America city. Many major companies throughout the world would consider a location in New York City. If any industry wants to conquer the world – and tech is on that path – New York City is a place to be.

On the other hand, New York City is a very different place compared to Silicon Valley and San Francisco. The notable laid-back vibe that helped give rise to tech start-ups over the decades does not really exist in New York City. The tech industry may be king in Silicon Valley but New York City has plenty of other options (finance, media, fashion, etc.). New York City is several times zones east, making some communication around the world more difficult (but making it easier to connect with Europe). The city and suburbs are on a different scale compared to the Bay Area.

Put this news from Google with Amazon’s search for a second headquarters and there could be a large geographic shift. While it would take some significant changes to move away from the massive Silicon Valley headquarters (including recent efforts from Apple and Facebook), the tech industry may be associated with new locations within a few decades.

A sociologist goes to the Urban History Association meetings, Part Two

I posted several observations yesterday from my time at the Urban History Association meetings. I turn today to the three most interesting ideas or debates I heard when attending sessions and panels:

  1. On a session on public housing, the discussant made this observation: with all of these negative cases of big government involvement in public housing, perhaps we need to turn away from seeing this as the solution. The main issue is this: when the federal resources are earmarked for the poor and redevelopment, it always seems to end up in the hands of the wealthy and developers rather than with those who really need the assistance. (For another example of this that involves lots of government money but not public housing, see the book Crisis Cities about New York City after 9/11 and New Orleans after Hurricane Katrina.) He suggested then and in later conversation that doesn’t mean that government should be completely removed from public housing. However, more local efforts seem to allow more opportunity for success rather than a completely top-down approach.I’ve argued before that the private market can’t do much about affordable housing in the United States, let alone public housing. At the same time, I would agree that the record of the federal government regarding public housing is mediocre at best. Are there some middle-range solutions? (I’ll also acknowledge that sometimes it does seem to take the federal government to help local governments do the right thing. For example, the Chicago Housing Authority was a mess for decades and required some oversight.)
  1. On a panel on Jane Jacobs, one of the scholars highlighted her upbringing in Scranton, Pennsylvania as being particularly formative. While Jacobs is most associated with New York City and Toronto, she was shaped by this smaller big city, the third most populous Pennsylvania city at the time and a city that attracted a variety of residents to work in the coal mining industry. This made me think of two things: (1) Why don’t more scholars pay attention to smaller big cities that may not be as important on the global stage but still contain a large number of American residents and (2) how might Jacobs and fictional resident and booster Michael Scott of The Office get along?
  1. A later panel discussed the history of Silicon Valley. In a response to a question about the representativeness of Silicon Valley for understanding other places in the United States and around the world, at least one participant suggested the ideas, social life, and spatial dimensions of Silicon Valley were likely to spread elsewhere and become normal. Another participant pushed back, suggesting that many places have no interest in becoming like Silicon Valley or don’t have the knowledge or resources to follow such a path. Such a discussion highlights how a place devoted to creating things for the masses may be in its organization and daily life be very separate from the rest of the country.

A bonus nugget from a session: when the Illinois Tollways first opened, there were not enough customers/drivers. Thus, a marketing campaign kicked off and the commercials featured Mary MacToll. Enjoy.

The possibilities of intentional community in McMansions

A Craigslist ad for living in a Silicon Valley McMansion highlights the potential for intentional community:

What is Le Chateau McMansion?

At the end of the day, after everyone has gotten home from work, and we’ve shared good food and good stories with the people we find ourselves surrounded by, we are a family. It means we care for each other, for each other’s things, and for the home we’ve created. It means spontaneous trips to National Parks, creative and fun house projects, and weekends you wish would never end. Sometimes it is kitchen dance parties, rooftop lemon golf, costumed 7-course dinners, farmers market trips by bike, homebrew beer contests, or chill weekends of grilling and gardening balanced by late-night deep philosophical debates. Without a doubt, it is a place to experience learning and growth, friendship, adventures, acceptance, and awesomeness in our home. We are more than roommates. We are community.

Who lives at McMansion?

A French roboticist, a talented couple from Texas whose music will pluck on your heartstrings, a rowdy outdoorsmen who can prepare the best breakfast burrito this side of the Mississippi river, a spunky dude from the dark corners of Tennessee, a project engineer from the Chicago suburbs, a sweet heart from Boston, and a troop of native Californians.. each with a hand in the tech industry, rock climbing, and a passion for cycling. Oh, and another techie as well. He flies balloons. He’s always gone though. Forget we mentioned him.

McMansions are often criticized for having too much space for not enough people. Even as the average household size has shrunk in the United States, new homes have gotten larger. Does a family of four really need 3,000+ square feet? (Perhaps it is not for the people; perhaps it is for their stuff.)

Yet, McMansions could often house a lot more people. Those big spaces that may seem empty with just a few residents could easily accommodate a larger crowd. This is especially needed in tight housing markets like Silicon Valley. As noted in this ad, a renter would get a lot of space (and utilities and food) for $1,210 a month. And having a lot of residents doesn’t even require splitting the McMansions into multiple housing units. However, it does require living in close proximity to more people, a feature probably more amenable to (1) younger adults and (2) people in tight housing markets.

It is also intriguing that this McMansion opportunity is listed as an opportunity to participate in intentional community. Don’t many people buy McMansions (and perhaps many single-family homes) to get away from other people? Again, this sounds like a feature that would appeal to a certain demographic.

When Silicon Valley communities have too many tech jobs, new residents

Many communities would love to have a tech company headquarters in town but what happens if that company is Google and it brings many residents and employees?

Google owns or leases about 7.3 million square feet of office space in Mountain View — roughly equivalent to three Empire State Buildings. That includes most of the property around its headquarters on the north side of the city near Highway 101, which cuts the length of the valley, according to Transwestern, a commercial real estate brokerage.

That success has brought Mountain View loads of tax dollars and a 3.3 percent unemployment rate, as well as skyrocketing home prices and intolerable gridlock. Good and bad, tech is responsible for most of it: Technology companies account for 27 percent of the jobs in the Silicon Valley region, compared with 7 percent in California and about 5 percent nationally, according to Moody’s Analytics.

The result is an existential argument that pits residents who want to halt the city’s growth against people who think Mountain View needs to grow up and become a real city.

Mountain View, about 40 miles south of San Francisco, has close to 80,000 people; with its strip-mall thoroughfares and streets of single-family homes, it looks like a sleepy suburb. But since hiring has boomed, the city’s roads swell with commuters during the morning and evening rush.

While this may get extra attention because it involves Google (does that do no evil pledge apply to the communities in which its offices are based?), this is a question that many suburbs face at one point or another. When new developments are proposed, whether commercial, industrial, residential, or something else, how might these change the existing character of the community? Jobs are often seen as good things: they provide employment and the buildings for employees generate property tax dollars, reducing the dependence on residential property taxes. Yet, what if those same jobs lead to new office parks that take up a lot of land, new infrastructure needs such as roads, water and sewer lines, and schools, and an influx of traffic? Or, what if such jobs require tax breaks or special deals for a single business or industry?

Two possible outcomes here (and this is not an exhaustive list):

1. Why aren’t urbanists calling for companies like Google to move to large cities? A lot of the issues with infrastructure and space could be more easily absorbed by a major city. Three Empire State Buildings worth of space is still hard to come by but Granted, this hasn’t gone smoothly recently in San Francisco but developing new land leads to particular challenges, especially in places used to a smaller population.

2. At some point, Google could go the way of other companies and organizations and start making demands to push Mountain View to accept what they want. The end of the article hints at this; if Google brings in a lot of new employees, they could even sway local elections. Could Google hold the suburb hostage to get what it wants?

You don’t want to win the McMansion award from protesters

Some antitech protestors recently handed out a McMansion award in San Francisco:

Wearing a pig mask and sequined suit jacket, Amy Gilgan stood outside of Davies Symphony Hall on Thursday night to accept the McMansion award at the second annual Crappys on behalf of Jack Halprin, a Google lawyer, landlord and frequent target of San Francisco’s antitech ire.

In sparkles and sneakers, technorati streamed past protesters and into the concert hall for the eighth annual Crunchies Awards, the supposed Oscars of Silicon Valley. Few turned their heads to witness the sidewalk satire. Investor Ron Conway, who last year stood on the Crunchies stage and offered his sympathy to the protesters, buzzed by a group of taxi drivers rallying against Uber. Evening news crews scaled back their coverage.

This year the pig masks were new, but the message was old. The verve of the antitech demonstrators felt diminished, and even they noted that the turnout was low.

McMansion sounds like an invasive species for the self-interested and wealthy. Some of the backstory:

Tirado said things started off  badly  as soon as Halprin bought and moved into the seven-unit building two years ago. First, Halprin forced one tenant out under owner move-in laws. Then another existing tenant was evicted,  again through the owner move-in process. Halprin told tenants that his domestic partner would be taking over the second unit. That partner, however, never materialized, according to Erin McElroy, an organizer with Eviction Free San Francisco. The affected tenant has since filed a wrongful eviction lawsuit against Halprin.

The remaining six tenants, which includes two teachers, a small child, an artist and a disabled senior, received Ellis Act eviction notifications in February of this year.

The protests continued through December. This is a big issue right now in San Francisco: in a very expensive housing market, Silicon Valley employees and companies have been perceived by some as throwing their weight around regarding properties and sending buses for workers. While this could be thought of as a more localized issue in some cities – perhaps gentrification occurring in particular neighborhoods – it is bigger than that since prices are high all over the Bay Area.

Two other quick thoughts:

1. It is interesting that we don’t hear as much about protests on this issue in New York City even though Manhattan is similarly expensive and luxury construction is booming. Perhaps the land there is being redeveloped from non-residential uses and/or fewer people are being displaced?

2. Generally, I don’t think winning an award with McMansion in the title is intended as a compliment.

The of effects tech company shuttle buses from San Francisco to Silicon Valley

A number of Silicon Valley workers live in San Francisco and a number of the biggest tech companies offer private shuttle buses for employees. This has led to changes in a number of San Francisco neighborhoods:

Take the public transportation provided by corporate shuttle buses from the likes of Apple, Google, Facebook, and others. It’s not news that these shuttles, and the big digital tech companies that run them, are changing the fabric of San Francisco as we’ve known it. What feels new is that it’s not enough to say that change is coming soon. It’s already, very much here

On one hand, some have called the shuttles “a vivid emblem of the tech boom’s stratifying effect in the Bay Area” because they allow the “techy progeny” of Silicon Valley to be “launched into SF proper.” That the shuttles are “alienating everyone who isn’t in technology” — or that there’s simply too much tech for one city to take.

Others are of the mind that it’s simply time to get over it and recognize a new reality; cities change, neighborhoods rise and fall. That in fact a paradox of Silicon Valley is in its “distributing meaningful equity” to ordinary people who wouldn’t otherwise access such wealth. (And then there’s the logic that wonders whether public transportation is yet another bit of infrastructure that should be upended by the Valley’s “meritocratic“ spirit.)…

What we’re talking about isn’t simply the replacement of presumably authentic recent immigrants by their presumably younger, whiter, or better educated new neighbors. What we’re talking about is the replacement of an entire system of urban inter-relationships, built up over generations and stratified in ways that make sense within an urban context — now short-circuited by the inexorable demands of the (suburban) digital technology landscape.

This is a reminder of a few things:

1. The arrival of “the creative class” is not just a positive occurrence. This is a group many big cities would love to have for their wealth (think of the tax money!) as well as their innovative and creative spirits. Yet, as the term gentrification describes, this group can at the least change the character of places and more problematically push out existing residents.

2. This hints at the interdependence within metropolitan regions. Tech workers may like their jobs in Silicon Valley but San Francisco offers a more exciting, urban, and cultured place to live. And, San Francisco benefits from its business connections to Silicon Valley. It would also be interesting to consider the role of San Jose which offers a bigger city closer to Silicon Valley but one that has less of a reputation for social life.

With these changes, it puts officials in San Francisco in an interesting position. Existing urban residents tend to resist major changes to their neighborhoods. But, as noted above, cities have a hard time turning down new money.