BEAUTIFUL, PERK-FILLED AND MOSTLY EMPTY
TECH’S BILLION-DOLLAR HEADQUARTERS FACE UNCLEAR FUTURE AS MORE EMPLOYEES WORK FROM HOME
HALF OUR EMPLOYEES COULD BE REMOTE WITHIN THE DECADE. WE’RE ALSO GROWING FAST. WE CONTINUE TO INVEST IN ADDITIONAL OFFICE SPACE AROUND THE WORLD AND REMAIN COMMITT ED TO OUR BAY AREA OFFICES. — CHLOE MEYERE, A FACEBOOK COMPANY SPOKESPERSON
For years, the y weren’t much to look at. The Silicon Valley tech companies famously started in garages eventually upgraded to low, beige office parks that bloated outward as more employees were hired. Bland on the outside, lucrative and increasingly crammed with college- like perks on the inside, they were the standard tech headquarters for years.
Over the past decade, however, tech giants have invested in real estate and proper headquarters. The kind of buildings and campuses that draw attention and lure thousands of employees to commute five days a week to work inside their open floor plans. Generous on- site benefits give those workers little reason to leave for a meal, or a trip to the bank.
Apple has its still- new, 175- acre ( 70- hectare), circular “spaceship,” $ 5 billion campus in Cupertino. Amazon placed giant, glass-dome greenhouses at the base of its main tower in downtown Seattle, part of a $4 billion city campus. Salesforce changed the San Francisco skyline with its massive billion- dollar skyscraper, topped with moving animations like dancing silhouettes and the Eye of Sauron. Google is building the circus- tentlike 595,000- square- foot Charleston East building in Mountain View, which is expected to be completed next year. And by a marsh on the bay in Menlo Park, Facebook erected boxy Frank Gehry buildings topped with trees at around $300 million each, according to Build Zoom.
In March, the commutes stopped. Many tech company offices have been fully or partially closed, and some of the largest like Google and Facebook have told employees they can continue to work remotely until at least summer 2021. Twitter and Slack, have gone so far as to say working from home, even in another part of the country, will be an option for some or all employees indefinitely.
Google CEO Sundar Pichai said the company was looking at more flexible hybrid models of in- person and remote work in a recent interview with Time magazine, after an internal survey found that 62 per cent of employees wanted to come back to work in the office just “some days.” Even Apple seems to be embracing the shift, although still unofficially. CEO Tim Cook said that 10 to 15 per cent of employees have come back to the office, but that things won’t entirely return to the way they were. A recent video presentation of its latest gadgets showed a largely empty campus.
When the pandemic winds down and offices are a safe option again, white- collar workplaces could be changed forever. The corporate headquarters that serve as both branding and workspace, could change too, with ripple effects on their surrounding communities.
It is too early to know what trends will stick. It could all depend on what makes the next generation of employees happy.
“Amazon and other tech companies are competing for, not average talent, but the best of the best talent. The talent that is going to be producing patents or intellectual property that is going to be the next iphone or next Alexa or next Netflix,” said Mike Grella, founder of Grella Partnership Strategies and a former Amazon executive who works in economic development.
Housing costs in Silicon Valley and Seattle are still some of the highest in the country, and strict zoning laws — plus surrounding bodies of water — have made it nearly impossible to build enough new homes to keep up with the demand exhausted by tech companies. To compensate, tech employees receive high salaries on top of the generous perks, and sometimes even get help from the companies finding housing.
During the pandemic, some tech workers found a way to pay less. They have moved from major cities to suburbs, or even away from the states where their companies are based. Their decisions are often driven by the desire for more space and a lower cost of living, but also wanting to be closer to family. Once people get used to having more flexibility with where they live, it could be hard for tech companies to enforce old norms like coming in and meeting in conference rooms or chatting over low cubicle walls.
Some tech companies have changed their real estate plans. Pinterest paid an $ 89.5 million termination fee for the 490,000- squarefoot office space it was planning on moving into in San Francisco. The company, which is keeping its current offices in the city, said COVID- 19 was making it possible to have a more distributed workforce.
Many of the tech giants are still pushing forward with existing real estate expansions, including a new generation of campuses that goes in the opposite direction. They’re the modern version of company towns, mixing public spaces, stores and housing with traditional offices.
Willow Village is the quaint- sounding name of Facebook’s planned 59- acre ( 24- hectare) campus in Menlo Park that has been at least three years in the making. What’s notable about the plan, which is still in the review phase, isn’t how much is dedicated office space — currently 1.25 million square feet — but how much is for other uses. There’s a grocery store and pharmacy, a hotel, an elevated park, a “town square,” bike paths, stores, a visitors centre and a dog park. There are also plans for up to 1,735 units of housing, about 20 per cent of which would be made available at “below market rates.”
“Half our employees could be remote within the decade. We’re also growing fast. We continue to invest in additional office space around the world and remain committed to our Bay Area offices,” said Chloe Meyere, a Facebook company spokesperson.
These kinds of campuses could help the companies get more control in their communities, while also offering benefits for non- employee residents. With claims of community connections and environmentally friendly design, they’re also an attempt to appeal to the values of potential employees, Grella said.
“Part of it is that appeal to a millennial sense of wanting open space,” Grella said. “There’s a strong bend among millennials in caring about sustainable development and sustainable place- making and open spaces. I think that is a very intentional appeal to those employees.”
Giving employees a reason to stay local is one strategy for tech companies. Another is meeting potential talent where they want to live.
Many of the major tech players are investing in smaller “hubs,” or big offices outside their base locations. Facebook just purchased outdoor company RE I’s Bellevue, Wash., 400,000-square-foot campus for $ 367.6 million. Amazon in August announced plans to hire more people at offices in Dallas, Detroit, Denver, New York, Phoenix and San Diego. It is also expanding closer to home, with newly announced plans to add 25,000 employees in Bellevue, a Seattle suburb. Google is opening new offices in Houston and recently expanded in Atlanta, Chicago and Madison, Wis.
Will Hunsinger, CE O of Silicon Valley executive- recruiting company Riviera Partners, says he has clients trying to recruit talent from the Bay Area by selling the benefits of their less-obvious locations, like Austin; Boulder, Colo.; and even Bozeman, Mont.
In general, the tech companies he works with are on the fence about going all- in on remote work. It could be a tempting perk to lure talented employees, but most companies still prefer to have people in the offices, he said. Smaller organizations might try it first, because it could save them money on real estate while being perceived as a perk. Companies can also offer lower salaries to employees living outside of costly coastal cities.
“For the senior executives, proximity is more important. For the individual or more junior folks, they’re the ones who probably are going to gain ground at the end of the day,” Hunsinger said.
In the communities already forever altered by their presence, by soaring housing prices, gentrification and investments in infrastructure, the future of these headquarters is complicated. If they stay and grow, problems of inequality, housing shortages and gentrification could be exacerbated. If the companies pull out, they could take a piece of the local economy with them.
“Who’s impacted the most, oddly it’s not the highskilled service worker, it’s the property owners, the small business,” said Adie Tomer, a fellow at the Brookings Institution. “They can take a real hit, that can create a negative cycle.”
The housing issues in these cities aren’t going away anytime soon, even if local and state governments are able to loosen existing zoning laws. That creates an opportunity for other cities with more ample supplies of housing in dense neighbourhoods, office space and access to nature. However, those same cities could end up in similar situations to Silicon Valley and Seattle if they don’t plan for housing ahead of time.
The companies and their employees are an important tax base for the cities where they are located. While the cost of some housing would go down, the cost of delivering the social services the communities rely on would not, said SPUR’S Nick Josefowitz.
“What you’re going to see is there’s just generally less tax revenue to invest in essential social services that our communities rely on.”