Tech Firms Now Choose Downtowns. Why?
|January 21, 2014||Posted by Staff under High Cost of Land|
This 2014 excerpt of Pacific Standard, Jan 17, is by Jim Russell.
When you look at the zoning regulations in Palo Alto, you learn that the tech companies have basically run out of room to build parking lots on their campuses — they can’t grow any further using the model of one parking spot per worker. So it’s logical that the tech companies would need to use shuttles to bring their workers to campus.
And where’s the densest place in the Bay Area, the place where the largest numbers of people can use the smallest numbers of buses? By this logic it’s not the youngsters that have chosen San Francisco to gentrify, but the Facebooks and the Googles who are incidentally causing this kind of development through the simple calculus of where they can house the most workers.
Cater to the wants and needs of talent and win the war for talent. Great, save that isn’t what the private bus map reveals. Cramming employees into San Francisco neighborhoods is a cost effective way to house talent while sparing dearer real estate for production.
Nonetheless, tech firms are moving to downtown San Francisco. The shift to urban headquarters favors cities such as Chicago, San Francisco, and Boston, destinations of choice for recent college graduates, while aging cities like Cleveland and Detroit struggle with corporate flight and economic decline.
IBM is interested only in recent college grads who are willing to work cheap in exchange for some tech experience. Dump the older and more expensive suburban-based employee. Plug in the millennial intern dazzled by the streetcar. Chicago is so cool I would work there for nothing.
Ed. Notes: Eventho’ downtown sites are the spendiest, for the trendiest workers and employers, it’s worth it, given the lower wages. Maybe the workers will see that they can make up for lower wages by getting a resident’s dividend, sort of like what they do in Aspen CO and in Singapore. There, they use a land tax to recover the socially-generated value of locations and an annual disbursement of the raised revenue to the local citizenry. It’s a reform even more transformative than the hi-tech they work on.