Silicon Valley's increasing dominance in tech sector bodes well for housing
Posted by CJ de Heer on Monday, March 21st, 2011 at 4:32pm.
Most of us in the Bay Area realize how important Silicon Valley is to the region’s health and wellbeing. The Valley has spawned many successful startups over the years, attracting highly skilled, highly paid workers, venture capital, and strong demand for housing. But just how dominant Silicon Valley is in the tech sector is surprising even the experts. And it bodes well for the long-term future of our Bay Area housing market.
Entrepreneur and former MIT research director Branko Gerovac examined the S&P Technology 1500 – the largest public technology companies in America – that have been created over the past 20 years to find out where and when they were launched. What he discovered was that every year, the Bay Area and the west coast are becoming more and more successful in spawning meaningful startups that grow into large companies – and the east coast tech hubs of Boston, New Jersey, Raleigh-Durham, and New York City less so every year.
In the past 20 years, Boston has added one company to the S&P-1500 technology sector companies, while Silicon Valley has added 19 companies. Our local startup list reads like a who’s who of publicly traded tech – Google, eBay, Yahoo!, Juniper Networks, McAfee, Palm…the list goes on.
Of course this doesn’t even take into account those burgeoning private tech concerns like Facebook that will become public one day soon. And then there’s Twitter, the company that could stake a rightful claim into leading the social networking revolution. Twitter just announced plans to lease headquarters space on Market Street in San Francisco as the company works to expand its workforce from 400 to close to 3,000 employees, as this story discusses.
Success breeds success. The Valley’s dominance in launching and growing tech companies will attract even more of the world’s top engineering minds, more creative entrepreneurs, more venture capitalists, and the cycle will repeat itself.
In a recent article entitled, Where the World’s Brains Are, best-selling author and urban studies expert Richard Florida said part of our formula for success comes from proximity to top-flight research universities (in our case, Stanford and U.C. Berkeley). Florida writes that these universities “increasingly function as a key hub institution of the knowledge economy” for Silicon Valley and the financial and biotech sectors of San Francisco and the East Bay.
All other things equal, Florida writes, “it is both easier for and more likely that leading scientists and researchers will move within these clusters” of local universities and remain in the general area to live and work. “This kind of proximity creates considerable short- and long-run advantages both for the universities and research centers within the cluster” as well as the region itself, he argues. “Established mega-clusters are likely to enjoy significant advantages into the foreseeable future.”
All of this could explain that while the overall Bay Area housing market has been holding steady in most areas, the high-end Previews market has seen strong activity in recent weeks in Silicon Valley, the Peninsula, and San Francisco. Just a few recent examples:
- A $17.5 million Atherton home on market for just 30 days sold with two offers;
- Another Atherton home listed for $6.9 million, sold for over $7 million, also with two offers;
- A $18.9 million Palo Alto property recently sold; * And a $5.9 million Palo Alto home just sold for over $6 million with six offers;
- Our Burlingame office is in escrow now with a $16 million Hillsborough sale;
- Six San Francisco properties over $5M have closed in MLS since Jan.1, and at least one other off-market.
- Eight of the Oakland/Piedmont office’s pending sales are in the upper end of the market.
My sources tell me a lot of the buyers in Silicon Valley and the Peninsula are coming from our fast-growing social media companies. Stay tuned for more on the impact of this hot new economic sector.
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