Rents are soaring in the Bay Area

Some cities, particularly in the heart of the Silicon Valley, have awakened to the key challenge facing their communities—the shortage in housing that is affordable.
There has been wonderful employment growth in both the South Bay and San Francisco, which is riding a construction boom because the millennial tech workers prefer an urban environment. That contrasts sharply with the workers of the past two decades in the Silicon Valley who were happy commuting to company campuses from more suburban communities. Now tech workers are riding luxury coaches from the suburbs or San Francisco to South Bay employers.
The result is that rents are soaring throughout communities within commuting distance of the South Bay. For instance, in a Jan. 2 edition, the San Francisco Business Times listed the 15 cities with the highest rents in the country—the top 3 were in the Bay Area: Palo Alto, San Francisco and Cupertino. Rental space in San Francisco commands a premium if the unit is located within walking distance of a stop of the tech buses.
The Bay Area had half of the top 30 nationally, including Pleasanton, No. 14 at $2,445, and San Ramon, No. 20 at $2,350, for a one-bedroom apartment.
The issue is supply that is being hugely out-stripped by demand. Remember my earlier blog post that noted the Chinese company investing in a condo project in Dublin because of good schools and a location near high-wage jobs.
It has been notable that as Google and LinkedIn try to add new office space in Silicon Valley communities, they are starting to offer affordable housing projects as part of their overall package.
That’s an “amenity”—to use Pleasanton’s term for an extraction from a development company—that we have not seen around here.
The situation in Pleasanton will improve a bit after the City Council was forced to rezone the nine parcels for higher density housing by the terms of a law suit that housing advocates won.
As those develop, some of the rental housing shortage will lessen, but the broader challenge is for Pleasanton and the other Tri-Valley cities to provide a range of housing that is driven by the market—not by city building permit limits on housing.
Sadly, that’s what the Pleasanton council has approved—an average of 235 units per year. That’s government mandating the market without regard to demand—the type of policy that has sent Pleasanton rental and purchase prices soaring. That’s good news for folks who are already here, but poor public policy.
The Silicon Valley cities finally are starting to be more assertive about the housing shortages there. Pleasanton is blessed by its location—the intersection of two interstate freeways, two BART stations and sitting at the gateway to Silicon Valley and the Peninsula from the north and the east.
That’s the key reason that Joe Callahan and the Prudential Insurance Co. developed Hacienda Business Park here.
We suffer with the traffic because Interstate 580 is the commerce (trucking) gateway to the Bay Area and the Port of Oakland to say nothing about a major commute artery. Whether it will ever get better with government manipulation of diamond lanes is doubtful a best—just look at our Southern California neighbors.