Google’s New Campus in San Jose Will Increase Rents
Google’s new San Jose campus will absolutely increase rents due to zero new housing being built to accommodate the tech giant’s employees. Because of this, labor group suggests that Google build 17,700 homes to stave off outrage, partiality, and malfeasance that often come with rent escalation.
Photo of Google’s Plans for San Jose courtesy of Lincoln Lion Tales
Labor group, Working Partnerships USA, says that Google’s proposed plans to build its mammoth new campus in downtown San Jose should be offset by about 17,700 new homes, including perhaps over 5,200 units priced at below market rates to keep rents at current levels.
Working Partnerships USA was founded in 1995. It is a self-described grassroots group promoting “a just economy” and it was agitated over housing anxiety related to the Google project for months, warning the San Jose City Council in May that the Diridon Station area is “one of the hotspots for displacement” in the South Bay.
Working Partnerships cites a commissioned study by research group Beacon Economics for its dire predictions that without new housing, the influx of workers to San Jose will exacerbate competition for existing homes to the point of driving up rents.
Photo: San Jose Spotlight
Right now, a one-bedroom apartment on Zumper averages more than $2,400 per month, with nearby cities like Santa Clara rising as high as $2,950.
“Families who rent in San Jose would be hit the hardest, paying $816 additional dollars in rent just for having Google move into their backyard,” said Jeffrey Buchanan of Working Partnerships USA.
Google promised to create new housing as part of its campus project, which will be three times the size of Apple Park, but has not released specific numbers. The company’s memorandum with San Jose, issued in 2018, also lists no specific benchmarks, per Curbed SF.
Google Downtown San Jose tech campus project, which has an official location of 440 W. Julian St., consists primarily of three office buildings, each six stories high, and totaling 1.02 million square feet. Photo courtesy of Mercury News
Asked for comment, Google did not directly dispute the report’s claims. Company spokesperson Javier Gonzalez said, “We know that housing is a vital issue and we‘re committed to invest in new housing in the area, including affordable housing.”
Beacon based its estimate on a statistical model projecting that the Santa Clara County workforce will increase “approximately 1.4 percent each [and] the county’s housing stock is projected to increase by 0.7 percent each year” without Google. Then it piled the Google gigs on top of that baseline and watched what happened.
San Jose Mayor Sam Liccardo speaks to the media in the Stephen’s Meat Products parking lot. Photo courtesy of Mercury News
The report also makes a number of claims about the state of housing and the workforce in Santa Clara County. Among its findings:
- The report estimates approximately 28,000 new jobs in downtown San Jose—20,000 Google employees plus 8,000 contractors. That figure is significantly more than the 25,400 that the city estimated in 2018 based on its own analysis. However, both numbers represents a startling insurgency of new economic activity, given that SPUR estimated in 2014 that the entire downtown San Jose region had only about 39,000 jobs to go around.
- “Each year since 2010, Santa Clara County has built an average of roughly 6,500 homes, about three-fourths of which were multifamily units.” However, the U.S. Census reports a lower rate of construction, with fewer than 3,800 net units added per year between 2010 and 2017.
- “In the third quarter of 2018, the median price of a single-family home hit $1.2 million and the median apartment rent reached $2,680 per month.” The California Association of Realtors did indeed report a median Santa Clara County price of $1.25 million for a house in September of 2018. This was down from more than $1.4 million earlier in the year, but the most recent estimate for April 2019 put the figure at more than $1.3 million. The census recorded a median Santa Clara County rent of $1,955 in 2017 (the most recent year for which data is available), although median market rents in 2019 in cities like San Jose may reach as high as $2,600 to $2,900 for a two-bedroom home, depending on the source.
- “In Santa Clara County, over 42 percent of working people—including three in four low-income tenants—are rent burdened.” The term “rent burdened” means paying more than 30 percent of monthly income toward rental housing costs. The report cites the census as the source of this statement, although the census does not calculate rent burden. A median rent of $2,680 would mean a minimum income of about $104,000 per year (taxes not included) to escape rent burden; according to the census, 46.6 percent of county residents made less than that in 2017.
Photo: CBS San Francisco
- “Per California’s Regional Housing Needs Assessment [RHNA], the city of San Jose needs to build 35,080 units between 2015 and 2022.” According to another Beacon study from earlier this year, San Jose’s current rate of construction wouldn’t satisfy its RHNA demand until 2048, whereas cities like Santa Clara would take over 2,000 years to build enough homes at certain income levels if the current rate of construction continued.
Photo: Washington Post
Data analysis concludes that Google and San Jose can “prevent rent hikes super-commutes, overcrowding, and displacement “by subsidizing the development of 5,284 affordable homes and helping produce 12,450 market-rate units” by 2030.
Sources: Curbed SF, Washington Post, CBS San Francisco