I don't get why Google and others are not going out of the valley to nearby cities like Sacramento? The difference in property acquisition is probably pocket change to the company, but I reckon the quality of life to the Googlers, Facebookers etc would be vastly different.
Why stop there though? Why not open up shop near a university town with a low cost of living? Steady supply of interns, new hires, R&D partnerships, etc. Culture in a university town, while not on par with a major city, is generally quite well too.
while there's a number of engineers at Google A2, it would constitute less than 10% of the headcount at that office (this is guess based on the LinkedIn research I've done. If someone has a more precise number, would very much like to hear it)
I agree, open up site offices near universities, major labs, single tech company towns, etc. There's a huge number of talented people looking for work in those areas and it saves on everything from real estate expense to relocation expenses.
But then of course, big companies will do it wrong. I'm reminded of companies moving to places like the D.C. area, where all their clients are in Virginia or Maryland, but go ahead and set up shop in D.C., where nobody from their client locations likes to go. Even better they'll pick one of the few spots in the city without metro access and make it even harder on themselves to do business.
Companies almost need relocation experts for setting up these kinds of remote sites.
As a real estate developer, I would love to see some more discussion on this thread. What would it take to get a major tech company to relocate an office or two from Bay Area to much cheaper regions. Obvious items would be network effects, primarily access to skilled labor and capital. What else? Cheap, frequent flights to the mothership? Has Google fiber and the likes had any real impact on luring tech workers out? If anyone knows of existing discussion or papers on the topic, id love to read it. I'm in Memphis TN, and cities in the area have low cost of living, some dense urban areas, etc. Oh, and 30-40 story class A office towers that are partially filled.
People have to want to live there, otherwise you're very limited in your recruiting pool to people either already in that region, or possibly people from that region.
As an example, I work in Oslo, and we have offices in Trondheim and Tromso as well due to the universities in those cities. Recruiting people to work in Oslo is quite easy, but almost nobody is willing to move to Trondheim or Tromso unless they were looking to move back there anyway.
The center of gravity also should move. Example, if all CXOs move then there is a chance that office will prosper and people from other parts of country would also move there even if they had no plans earlier.
Quite often I have seen that satellite office don't prosper because the center of action is still at HQ, that translates to freedom of moving between teams, opportunity to work on problems that really matter for the company, etc. Satellite office attracts only those folks who have reasons to be in those cities (usually for personal reasons, very seldom for professional ones).
Only way it can be really effective is if a company moves lock, stock and barrel to a new location - the way Boeing did in early 2000 (moved its HQ from Seattle to Chicago).
Google has an engineering office here in Pittsburgh right down the road from CMU. So do a lot of other tech companies. A huge part of that is the sheer number of colleges in the area, low cost of living, and apparently the booming food scene with lots of creative chefs due to low rents [0]. Not sure if I'm wiling to buy that last one as a tangible factor in economic growth, but it certainly tastes good in the interim.
It can be hard to find people who actually want to live there. It's one thing to have a stream of new interns and even fresh college grads, but what do you do when they constantly want to move somewhere else after a year or two?
Certainly cost of living in the area is becoming a major issue for companies. But it's the startups who are already being priced out of the area. Companies like Google and Apple can afford to offer higher wages (even if they don't necessarily want to.)
But before you see these companies trying to start a major hub in a university town, there are other large cities that would be more palatable: Chicago, Pittsburgh, Boston, and Portland are places I would expect to be considered. Even Raleigh/Durham and Charlotte since there's already a fair bit of momentum there, although I suspect them to be a more difficult sell for the same reasons I think Atlanta will have trouble attracting talent.
Atlanta would be somewhat attractive, except that Georgia has just passed their "Religious Freedom" law (i.e. the "We Support Discrimination" law). Tech companies tend to be more liberal and don't like limiting their applicant pool, and setting up shop there would certainly do so.
Why stop even there - why not just build your own town and your own university to train people the Google Way - if Trump can have a university, why not Google?
I'm an Xoogler, and before I quit last summer, our group had been slated to move from the main Mountain View campus to the new "Tech Corners" campus in Sunnyvale[1].
Before Google, I'd worked remote for 15 years, and am working remote again now. About the only thing that made working in the open-office environment tolerable was the feeling of being in the main campus where things were happening. Collaborating with other groups was a 5-10 minute walk or bike ride, rather than a hangout. I went nearly every week to TGIF in Charlies, and I went to a lot of the author talks, and to one off events (like internal job fairs, the MK fair before they got rid of it, GoogleWeen, etc), and use the urgent care clinic. Not to mention that we had zillions of cafes and food trucks to choose from, multiple gyms, multiple TechStops, etc.
Once you're all the way in Sunnyvale, in-person meetings become much more difficult, and the amenities like I mentioned above drop away. At that point, you might as well be in some lower-cost area with cheaper housing and a better commute. Or working remotely :)
[1]The new building was a new-style REWS abomination with impressive public spaces to walk through on the way to totally open offices with no cube walls (as opposed to the 4' walls around the 12 person cubes in the building I was in). So there was a lot of resistance in my group..
The opinions stated here are my own, not necessarily those of Google.
Google has offices all over the country, everyone just focuses on MTV as it's the biggest. In the US there are already large offices in Seattle, NYC, and Chicago. They are also expanding in other cities. Boulder CO is building a new building that can house up to 1500 people. In Austin, TX they are leasing 200,000sqft of office space downtown.
There are definite advantages to having all your people on the same project be in the same area. Remote offices are nice and all to attract talent that doesn't want to be in the Bay area, but there are downsides about distributed teams.
How many of their employees would like to move to Sacramento? While I'm sure the number is not zero, I doubt it's big enough to warrant doing such a thing.
Only if they save me more time and make me worry less than staying closer to home
Most perks are only for show anyway. I'd rather not have a dog than bring it to work, or just have time to play with it by commuting a shorter distance
Does those perks add to your quality of life? For me, I would put perks lower than having a lower cost of living, less commute time, less stressful lifestyle.
Except that after those ten years, the value of the property will exceed $0. In fact it's rather likely to be worth more then than now, so it's actually an investment.
As Tony Soprano said, "buy real estate cus God ain't making any more". Demand is pretty certain to outstrip supply from here on out.
That quote makes a lot of sense in a country with limited land like somewhere in Europe. It doesn't make sense in the United States where we have large swathes of completely undeveloped land. Even useful farmland is only a few multiples of $1000/acre.
Your quote would force them to appreciate in price 100 years from now, but on timescales shorter than that I don't see it providing any real guarantee. Just look at Detroit.
Land isn't valuable because there is a finite supply. Only certain land is valuable because there are buildings and people nearby, which is why land out in the wilderness is nearly free. The prediction is based on the fact that individual cities grow, not that the total fraction of land occupied by humans becomes nonnegligible.
It is more typical (in the US) for real-estate to be amortized over 30 years. The real costs need to account for taxes and maintenance and depreciation: after 30 years the building but not the land is worth $zero and the "loss" can claimed as an expense.
To go even bigger, there's commonly a property tax abatement from local and state governments for large projects and often actual tax credits.
Just for comparison, that would cover PITI for a 15 year mortgage of around $330k. In cheaper parts of the country, like Dallas, that would net you a 4br 2000+ sq foot home on a 1/2 acre in an affluent suburb.
Mortgages also don't go up once you're in, so they decrease as a percentage of living cost over time (assuming no change in income), while rents go up roughly with inflation.
Does the US not have standard variable rate mortgages? They are the norm in the UK, and they very much can go up (or down) over time, depending on the interest rate. Of course many people have assumed that interest rates will be low forever.
Does the US not have standard variable rate mortgages?
They exist, but I have no idea how popular they are. Some older folks like myself remember the 80s, when variable rate mortgages were more popular due to higher interest rates at the time. I also remember a few people I knew who nearly lost their house because their variable rate mortgage went up considerably (all kept their houses, but they were pinching pennies until the coins screamed).
Thus I extrapolate that I'm not the only one that stays away from variable rate mortgages. That, and our current mortgage is at 2.5%.
It does, but it's generally discouraged and not common. Fixed rate mortgages are far more common and desired. We also have mortgage types that start at a fixed rate and then after some period of time become variable. Many of the variable rate mortgages also have caps on how much they can float per year.
The US does have variable rate mortgages, but in the current environment of VERY low interest rates, they are typically only used by investors that plan on selling quickly.
Most people would be getting a fixed rate these days.
We had property taxes go down (based on declining home value, of course). When renting, I never had my rent go down, even if the building values went down :)
You're right, though, on tax/ins. They tend to be a much smaller portion of the outgoing. Currently combined, we're at ~$3000/year for tax/ins. Even if that went up by 20%, it's an extra $50/month (wouldn't be happy about that, but it wouldn't break the bank). Rent of $2100 going up 20% is a much huger issue.
This is a common but not very useful comparison. My partner and I are 2 people. For what we pay for our Portland apartment we could easily pay for a large-ish house somewhere in a decent sized but smaller city.
Doesn't mean we want to live there or even have an interest in a bigger place. What would we do with 4 bedrooms?
These kinds of comparisons need to be prefaced with "If you want a big house or are interested in moving thousands of miles."
>>These kinds of comparisons need to be prefaced with "If you want a big house or are interested in moving thousands of miles."
Couching every comment with leading text to scope who might be interested in it doesn't scale well. I didn't pitch it as desirable for everyone...and I assumed it might be interesting even to those that don't want it.
For example, I have no intention of ever working in the Valley. But, I am still curious about how peers of mine that do are compensated, and what the local cost of living is.
Sounds around London prices to me where things are just as ridiculous. My wife and I moved back to our hometown recently mostly to get away from that and now pay less than half that for a three bedroom house. Being able to do that makes me ludicrously thankful for us both being able to work remotely 90% of the time.
I don't understand why people do this. I'm paying $1000/month to own a 2 bedroom house with a huge garden. I built my own office at the end of the garden, which I can guarantee you is several times bigger and more comfortable than a work cube. I work remotely for a major US software company. (My commute is 1 minute if I'm carrying a cup of tea, slightly shorter if not).
Not everyone has the option to just telework. Many companies do not have this option and most jobs require face time of some sort. That's like saying you got a job at Google and asking why everyone doesn't simply get jobs at Google.
I would argue that most people in IT (which is what we're talking about here) have the option to telework.
It may be that because of technical or institutional barriers they are not able to do this, but those usually have very little to do with the nature of the work.
It depends on priorities. Some people prefer city life. I value access to transit and amenities more than a large living space or a garden, and I _detest_ having to drive everywhere, so I pay more to live in a city.
Different strokes for different folks, though! Your office looks nice.
Yeah, but where are you? I'm guessing out in the middle of nowhere. While that appeals to you, it very much does not appeal to me. I like being where people are, where there is stuff to do, different types of food to eat, and culture around.
Rent near Manhattan in the NYC area is quite bad as well. In Manhattan, a tiny one-bedroom will cost you $3500.In the parts of Queens, Brooklyn and Jersey City that are fairly close (commuting time-wise) to Manhattan, the rents are horrible as well.
One of my friends pays circa $2,600/mo for a one-bedroom in Carrol Gardens. An acquaintance in Long Island City had to move out of a two bedroom apartment in Long Island City, because the landlord increased the rent to $4000/month! Exchange Place (Jersey City), Brooklyn Heights, and Downtown Brooklyn are similarly super-expensive.
You can easily rent a bedroom in an older house or multi-room apartment for around $1000-1200 in Palo Alto, Mountain View, and Sunnyvale though. A few of my coworkers do this.
Ah yes, the worlds best and brightest, in the worlds technology hot bed, blamed for gentrification, told we are over paid, told our skills are in such demand that special worker visa systems are in place to supplement the supply but not only can they not afford a home, they can't afford rent by themselves.
Someone is making money in SV to live alone and buy homes but it isn't the engineers.
some engineers most certainly do. I'd say anyone who makes over 200K can afford to live here. Can a single person making 150K a year afford to live in Santa Clara County? I'd say for sure.
I'd say (depending on an individual's exact circumstances) a high 5/low 6 figure salary is the minimum salary for a single person to be able to rent a halfway decent apartment someplace in the Bay.
I'm just responding to the sentiment that even engineers have to resort to renting rooms from people. Depending on living expenses and the ability to save, lots of engineers can afford to live decently in SV. 90k isn't going to buy you a house in Palo Alto, but you can afford to live in SJ/SV/SC/etc with that.
I recently moved from the Bay Area to get rid of this-as you get older, interviewing with people (often for fucking culture fit) for the privilege of sharing a bedroom gets really, really old (I just want to pay rent and mind my own business). There's something to be said about living as an adult and having your own place.
Not to beat a dead horse, but that's hard to do with a family. So by the time you're late 20s to mid 30s and have a stable long term relationship and possibly kids, you're looking at those $2900/mo prices.
Great...so our south bay becomes even more ridiculously congested. We need so much better mass transit to accommodate all this growth. Instead of spending billions on a bullet train to Los Angeles, can't we invest that money in better mass transit in the bay area?
That money is (presumably) benefitting the whole state, whereas you're looking to take all that money and just benefitting the small part where you live. Not really fair.
I hear you.. but I'm guessing there is actually a larger number of people that would benefit from the bay area being less congested than the number of folks riding a bullet train to LA
Isn't the real WTF why a cloud company needs to invest a quarter of a billion dollars just to inconvenience 3000 workers with a commute, and narrow their talent pool to the people they can hustle up work-permits for in the US? (Yeah, I know, Google has offices outside the US, too).
I think the answer is a combination of culture and sunk cost. The people hiring do so locally for personal cultural reasons; hiring globally means changing almost all busines processes. They already have thousands of co-located employees, so switching to a global model would entail drastically changing the nature of their company.
It's "only" about $85k/year, and as many others have pointed out the value of the building is not likely to go to zero (although seeing the ghost of Detroit...)
Anyhow, not saying I support it, but at the salaries Google can afford it makes sense...
I agree, but I feel that I already know the answer. That is the assumption being the best talent is on the peninsula. If you open an office too far south or across the bay, then people from Mountain View upto San Francisco will not come to work for you.
But, there's still the time cost of commuting. If you pay a premium to live in SF, then you're not going to want to commute 90-120 minutes so South Bay. Then another 90 minutes back at night. In that situation, you'd be paying a premium to live in cramped quarters, in a city with thousands of things to do, but have zero time to do any of it during the week.
I meet people on Caltrain coming from Gilroy commuting to work all the way in SF. Commuting 3-4hrs a day. WTF? I guess there's nothing to do in Gilroy, or they hate their families. Joking aside, the honest answer is the only affordable, nuclear-family homes are in the far-south. (Back to joking. Can we even call Gilroy the Bay-area?)
As it seems to me. When you make the decision to come to the Bay-area.
* You have to decide, do I want to drastically overpay for where I live to be close to SF?
* Do I want to commute 1-3 hours a day?
* Or, do I want to have roommates when I am 30+ years old?
> But, there's still the time cost of commuting. If you pay a premium to live in SF, then you're not going to want to commute 90-120 minutes so South Bay.
Yeah. That's what I meant. Google could build offices in the Gilroy or the East Bay to improve those employees lives. Companies like Uber are opening offices in Oakland, which is a pretty central location from BART and freeways.
"You have to decide, do I want to drastically overpay for where I live to be close to SF?"
Of course, if you make good tech money (say, anything over 200K) then its a moot issue-you can overpay for ridiculously priced 1-2 bedroom apartments, and still have money left over to save/indulge with.
> That is the assumption being the best talent is on the peninsula.
I've never seen good data to back this up. Are you aware of any sources? (I know you weren't making the claim yourself.) Talent is already difficult to register, and I find it absurd to think that all the best engineers in the world would cluster in west bay. The only people clustering are those who want to work for google (or startup XYZ), not the people google necessarily wants to hire.
"A second Apple spaceship will be landing in Sunnyvale", October 2015, maybe it has something to do with it, somehow. http://fortune.com/2015/10/02/apple-spaceship-sunnyvale/
"The transaction is another sign—as if you need any more—of Apple’s tremendous expansion, potentially providing enough room for more than 3,000 workers. "
569,000 square feet... 3,000 employees. That's 190 square feet per employee. I know there's waste with hallways, bathrooms, utility closets, etc... But doesn't Google also pack their employees in like sardines?
Isn't a (small) cubicle more like 80 square feet? That'd mean more than half of the space is not-cubicle, right?
Now that I think about it, I'm pretty sure I've worked in 64 square foot cubicles...?
And I had to share a cubicle for a short time when I think I had 80 square feet.
[1]The new building was a new-style REWS abomination with impressive public spaces to walk through on the way to totally open offices with no cube walls (as opposed to the 4' walls around the 12 person cubes in the building I was in). So there was a lot of resistance in my group..
I find it crazy how the big IT companies are still willing to pay almost a million a worker per office (most likely much more if you count running costs), any idea why Google is not hiring more people remotely? I mean, if that's a modern IT company that cares for employees it would be the case, I'd rather make $100k in different state or even country, than pay $5k for rent in the bay...
Secondly, buying a building is (save some closing and renovation costs) a neutral operation on your balance sheet, especially if you're flush with cash. In other words, when you buy a building, it maintains its value.
Still doesn't make it a 'cost' of 100k / employee. And of course you depreciate etc. My point was that buying a building isn't a 'cost' in the way pencils are.
While it's not a million a worker, I think providing and even promoting remote working can be beneficial overall. I work remotely and it saves money for both me and my company. There's also less stress associated with commuting. Remote work is not for everyone (nor possible for all job functions), but companies and employees should give it more consideration. https://remote.co/10-stats-about-remote-work/
