Is the problem hiring people to work in Fremont or is the problem transferring people who already work in Palo Alto to work in Fremont?
Transferring people can often mean their commute time increases 30-40 minutes. That sucks basically regardless of whether you currently have a walking commute or hour long one. And it's not like you usually have an entire team staffed only by east-bay residents: do you split the team into two offices? Force someone to suck it up? Rotate teams through offices? All of these options will basically be traumatic for some portion of your team.
Tesla recently had a problem with it when they were trying to transfer eng offices from PA to fremont for example.