Tech giant Google is being criticized for what many are calling an attempt to create a modern company town, where Google itself owns the majority of houses and businesses.
CNBC reports that Google announced last month that the company would invest $1 billion in the construction of 20,000 Bay Area homes, but residents are already seeing the effects of this announcement and are worried about the further effects of Google’s growth in the area.
Following the announcement of the investment, Google CEO Sundar Pichai tweeted to the mayor of San Jose, Sam Liccardo: “Glad to do our part to support our future neighbors in San Jose.” But now tense discussions over the rising property prices in the area are bringing into question whether the new mega-campus is a good thing for the area. Community members and real estate experts are now claiming that the lack of detail in Google’s plans has them worried about the future.
Tech firms opening huge campuses and housing areas in the cities they’re located in is not an entirely new concept; Microsoft pledged $500 million to develop affordable housing in Seattle while Silicon Valley giant Facebook also has plans to create a Facebook town in the Bay Area. But with tech workers stating in a recent interview with the Guardian that they are leaving the Bay Area because of housing costs and the average price for a one-bedroom apartment in San Francisco reaching $3,500, many are questioning whether tech company real estate is a good idea.
Google first expressed interest in the development of a large tech campus in downtown San Jose near Diridon Station, a major transit hub, in June 2017. Following the announcement, the price of homes in a three-mile radius of the possible Google campus site jumped by seven percent; Condo prices in the Rose Garden neighborhood near the location jumped by $50,000 in one week.
Brett Jennings, a broker and the founder of Brett Jennings Real Estate Experts, noted that six months later the prices in the area had jumped by as much as 25 percent stating: “The Google effect. We’re feeling it with buyers and sellers, and we’re also seeing it.” San Jose city council meetings have since been interrupted by protestors who argue that their families who have lived in the area for generations could soon be pushed out by rocketing property prices.
A lawsuit was filed by Working Partnerships USA and the First Amendment Coalition after San Jose city members and Google signed a non-disclosure agreement, with WP USA and FAC alleging “secrecy” and a lack of transparency on how the two groups would address issues raised by the community. At a meeting in December, the San Jose city council unanimously voted to sell more than $110 million worth of land to Google, where the company would construct a 50-acre campus.
Jerry Strangis, a longtime employee of San Jose land use, stated that the housing commitment appears to be a “clear” response to the community’s fears about the construction of the Google campus. “What the city is doing and how Google is reacting to concerns and criticism about displacement with this housing initiative is really a byproduct of making this whole project work,” Strangis said. “They’ve acquired lots of the land but they also need to get the project approved and it’s pretty clear that this announcement will help make way for that.”
Leslye Corsiglia, the co-founder and executive director of Silicon Valley at Home, a group which advocates for affordable housing and has worked with Google on its housing plans in Mountain View commented on the San Jose issue stating: “It certainly benefits them [Google] to make sure they have places for their employees to live, and to also be a good community member.” Corsiglia continued: “I think you can question whether or not it’s enough, but it’s certainly a lot and something other corporations are not doing.”
Since then, Google has purchased more San Jose land buying a site operated by the San Jose Fire Department for $41.2 million. A week later, the company spent $15 million on four downtown San Jose sites in a deal with real estate firm Trammell Crow, the company then purchased $58.1 million worth of land in North Sunnyvale.
Kelly Snider, a real estate development and land use consultant who has worked in Silicon Valley for the last 25 years, commented on Google’s methods stating: “When they say, ‘we’re going to add housing’ but then also increases employee base and land grabs, it’s sort of treading water, not increasing ratios.”