Google in San Jose? Look what happened with Amazon in Seattle

This article was originally published in The San Jose Mercury News on Dec. 3, 2017.

An army of 20,000 Googlers is expected to descend upon the capital of Silicon Valley when the search giant opens a new campus here. To see what happens when an explosively growing technology company moves into downtown, look no further than Seattle.

Amazon’s dramatic expansion there has wrought a profound transformation on the city and holds lessons for San Jose.

Some points are beyond dispute: rent and real estate costs in Seattle have skyrocketed, as has homelessness, even among people with jobs. Each day, on average, one small, older home is demolished to be replaced by a larger one three times as expensive. Traffic has gone from awful to nightmarish.

At the same time, unemployment has plunged below 4 percent, while average household income has spiked, fueling local businesses and creating opportunities for entrepreneurs. Amazon’s expansion — it has doubled its office space to 8 million square feet in the past three years as its workforce has ballooned to 40,000 employees — has not only filled the city with well-paid young techies, it has drawn other tech firms large and small to Seattle, adding more fire to the robust economy.

“It’s been tremendous for creating a healthy vibrant downtown and having the sidewalks full of people,” said Downtown Seattle Association president Jon Scholes.

But most of the problems afflicting Seattle in the age of Amazon are already major concerns in San Jose and Silicon Valley — the booming tech industry has sent the cost of living skyrocketing, snarled traffic and put people onto the streets. Would Google make these problems worse? Probably, say experts, but there are ways to lessen the misery and maximize the benefits — if Google and City Hall follow the right playbook.

Lessons learned from Amazon in Seattle run from a need to move quickly on housing, to the importance of locating offices and homes near transit, to the pressure the city must exert on Google to minimize problems it helps create, and to the integration of office workers into the local economy.

“We’ve seen the chefs and restaurants downtown really explode, with food trucks, too,” he said.

Still, Seattle’s experience shows that many residents not pulling in hefty tech-job salaries are priced out of some spaces. “Culture is unaffordable right now,” said Bonnie Smith, a Seattle freelance writer, formerly of the Bay Area. “It’s expensive to go out to a lovely restaurant, it’s expensive to go to the theater. You have to have money to get in the door.

“With all the money coming into Seattle, for how much investment and jobs, there hasn’t been as much investment in the collective institutions that keep this city a wonderful place.”

The downsides to Seattle’s Amazon-led expansion have been inescapable. The growth worsened its roadway congestion by 42 percent between 2011 and 2016, according to traffic measurement firm TomTom. And that’s in spite of decisions by Amazon to locate offices in and around the downtown. By deliberately choosing to occupy space near public transit, Amazon has succeeded in keeping a great many of its employees out of cars for commuting, Scholes said. Today, about 70 percent of downtown Seattle workers arrive by train, bus, bike, ride-sharing or on foot, about a 40 percent increase over the past decade, Scholes said.

Like Amazon, Google has chosen a transit-friendly location for the San Jose campus, where plans call for construction to start in 2025. Setting up beside the Diridon Station transit hub would give employees access to an increasing variety of mass-transit options, from the buses and trains stopping there now, to BART in 2025 if all goes according to plan, and possibly high-speed rail in the years following.

“What’s critical for us is to get the transit right,” San Jose Mayor Sam Liccardo said. “We have the opportunity to bring BART and electrified Caltrain high-speed rail and several other transit systems together at one place, Diridon, where we can build within a decade the busiest multimodal transit station in the West.”

Liccardo believes the Google campus will aggravate local traffic problems — but that’s not necessarily bad.

“There have been too many Saturday afternoons where you could shoot a cannon down 2nd Street and not hit anyone,” Liccardo said. “That is not the sign of vibrant, bustling downtown. That is our past.”

Still, with up to 20,000 Googlers coming to work in San Jose, there would be added pressure on the region’s roads even if many workers take mass transit or ride Google’s private commuter buses. That’s where the importance of building housing nearby takes on additional importance, observers say.

Creating new housing is critical in a booming economy, as Seattle learned the hard way. The city added 20,000 units of housing over the last decade, but real estate prices are still rising faster than in any other market in the country, and rent increases are outpacing nearly all other U.S. cities, with a 63 percent jump since 2010, according to the Seattle Times.

“Much of that is attributable to just the pressure that is being put on the housing market that comes when you have 40,000 to 50,000 people with high incomes all looking for a place to live,” said Rachael Myers, executive director of the Washington Low Income Housing Alliance. “The sheer number of people that Amazon employs here really clearly makes a difference.”

San Jose has seen a similar phenomenon, with rents and real estate prices surging despite construction of 16,000 new housing units between 2007 and 2014, according to urban-planning nonproft SPUR.

Seattle’s fast-rising costs have squeezed even the gainfully employed out of their homes, said Seattle council member Mike O’Brien.

“I’ve got economically zero unemployment in my city, and I’ve got thousands of homeless people that actually are working and just can’t afford housing,” O’Brien said. “There’s nowhere for these folks to move to. Every time we open up a new place, it fills up.”

On housing, Seattle was late in addressing the fallout from Amazon’s growth, Scholes said. “You need to be prepared to move really fast,” he said.

Liccardo downplayed the potential impact of having up to 20,000 new Google workers toiling downtown.

“This campus is going to take at least a decade for full buildup,” Liccardo said. “In a city of a million people, 20,000 jobs over 10 years wouldn’t even be enough to maintain the job growth we need to satisfy our growing population.

“When people are concerned about 20,000 Googlers falling out of the sky and where are we going to be able to house them all, we need to keep it in perspective. The net impact, I think, will come out in the wash.”

Liccardo’s 15-point housing plan calls for relaxing development guidelines to allow residential towers near new transit stops, and to encourage homeowners to build secondary units. The plan also calls for expanding housing  — with affordability mandates — to areas where it doesn’t exist.

San Jose officials are saying little about negotiations with Google over the downtown campus. The plan involves 6 million to 8 million square feet of tech offices and research-and-development space in an area of about 240 acres. The campus would provide open spaces for public recreation, along with entertainment and retail options, city officials have said.

Housing advocate Myers believes now is the time for City Hall to put leverage on Google to tie the development to home creation.

“It’s just a question of how much and what the city can do to encourage them to be a good partner, prior to coming,” she said. “There are some things that you can ask of corporations that are going to benefit from coming into your area.”

Scholes believes that, in San Jose, openness to new construction would go a long way. In nearby Palo Alto and Mountain View, for example, officials and residents have welcomed tech jobs but resisted new housing — although Palo Alto two years ago passed an ordinance limiting growth of office and research-and-development space to 50,000 square feet per year.

“It’s not up to these companies to solve the housing issue,” Scholes said. “It’s up to the community and the city to regulate housing to allow more of it to be built, and the market will respond and build it.”