square feet from 2002 to 2014.
construction project approvals
over the past four years—46
million square feet—equals the amount approved during the
previous 10 years combined, the Index said.
However, demand is not so high for office, R&D and other
commercial uses that every square foot is filled, at least not immediately.
Last year did see a slight rise in commercial vacancy
rates in Silicon Valley compared to 2016.
Michael Miller, executive director of the Builders’ Exchange of
Santa Clara County, said those figures are somewhat misleading,
since just a handful of large-scale projects—the 10-mile BART
extension through Milpitas and San Jose; the new 2.8 millionsquare
foot Apple “spaceship” headquarters in Cupertino; and
Levi’s Stadium in Santa Clara, the home of the San Francisco
49ers that opened in 2014—skew the numbers a bit, giving the
impression of multiple projects.
But there’s still plenty to be excited about, Miller said.
“We’ve had three exceptional projects in recent years, each one
worth $1 billion or more,” he said. “It skews perception as to the
level of activity. But the reality is we’re still doing very well.”
That includes the housing sector.
“I’m so encouraged that people in government at the local
and state level realize we need to build housing,” Miller said.
“Whether it’s companies like Google and Facebook proposing to
build thousands of housing units, or cities like Mountain View
and San Jose, we’re seeing lots of activity.”
Miller also pointed to construction of the mixed-use 700 Santana
Row project started in 2017 that will add 284,000 square feet
of office space and 29,000 square feet of retail to the area when
completed. Other major projects approved—though not without
creating traffic-related controversy—include the 970,000-squarefoot
Santana West office development at Santana Row and the
$6.5 billion, 9 million-square-foot mixed-use CityPlace project
in Santa Clara.
According to the Builders’ Exchange 2018 Construction Forecast
report, there will be nearly $5 billion worth of construction
projects in Santa Clara County in 2018. A total of 5.6 million
square feet of commercial space is under construction in the
county, with another 70 million square feet proposed.
That’s keeping construction workers busy. From a previous
high of 47,500 industry workers finding employment in the
halcyon days of 2007, and the recession-created depths of only
31,800 working during 2011, employment dramatically rebounded
to 48,200 last year. Unemployment rates in the industry
plummeted to 4 percent in 2017.
Though salaries are good for construction workers, they too
may not be enough to afford local housing costs.
“Many people are driving many miles to get to jobs here,”
Partly because a large number of older workers are beginning to
retire and there are fewer younger workers to replace them, skilled
workers are much in demand.
“I hear stories of people with work going to job sites and offering
workers more money, hiring them right off the site,” Miller said.
If prosperity creates its own rules, as well as its own champions,
there’s reason to expect more unorthodox transactions, mammoth
building projects and interstellar profits to come in the near future
as Big Tech flexes its pecs. n
June/July 2018 63
among other topics.
“I suspect some of these data are actually available and could be
normed for both other areas in the U.S. and around the world,”
he said. “I think the report, in its present form, underemphasizes
concerns of human sustainability.”
BIG TECH LEADS
Technology, Silicon Valley’s prosperous dominant sector, created
about 25 percent of the region’s new jobs in 2017, according to
the Index. Half of those jobs were created by Big Tech—Apple
Inc., Google Inc., Facebook Inc. and other major Valley players.
“That does tend to suggest we are seeing less entrepreneurial
activity in the Valley now,” Hancock said.
Last year saw a smaller number of newer companies in the
Valley receiving Series A and B rounds of funding than in the
previous six years. Hancock said it’s too early to say whether the
decrease signifies a trend or is a temporary glitch.
“Those big companies are highly successful, and the whole world
is demanding their products,” Hancock said. “We have been here
in the Valley before, back in the 1960s, ’70s and even into the ’80s.
Back then, Intel and Lockheed were the two huge Valley companies.
Now, we are back here with the large tech companies.”
Weinberg agrees large tech companies generally play a more
dominant role in the economy of Silicon Valley and the Bay Area.
VC deals tend to be larger and less numerous, and more jobs are
being generated by large companies, he said.
“But I don’t think we’ve had a complete transformation to a bigcompany
economy,” he said. “It’s not yet night and day between
startups and big companies.”
BUILD IT AND THEY WILL COME
Because of the robust high-tech sector, along with several large
local public sector projects—most notably the BART extension
from Fremont into North San Jose—the local construction industry
is building prosperity again.
According to the Index, more new commercial space has been
built in Silicon Valley over the past three years than during the
previous 13 years combined. During 2015, 2016 and 2017, that
figure stood at 18 million square feet, compared to 14.9 million
BY MOST ECONOMIC
ECONOMY IS A
HIGH AND DIPPING
LOW TO CREATE IDEAL