WHAT’S HAPPENED TO SILICON VALLEY? (Part 3) by Scott Budman
When it comes to business buzzkills, few things do it for me as much as driving through Silicon Valley and passing sign after sign letting us know that yet another building is “For Lease.” Each sign tells a story, and most go like this: Built – or at least occupied – during good times, this building is now a sad monument to a better, more vibrant time in Valley history.
There are so many of them all over the Valley these days, we even have a name for them: See-Throughs. As in, with no desks or people inside, you can see through the entire thing. You may not have thought about it until recently, but Silicon Valley has always revolved around our real estate market. Lately, both the tech industry, and our housing market, have stagnated.
I visited Mike Rugani at Alain Pinel Realtors the other day. Alain Pinel sells a lot of high-end real estate, and the office is cool and posh. Rugani, however, is in the unenviable position of handling the firm’s commercial real estate. “Ever since the tech market fell, a lot of people gave up their space,” he says. “Companies declared bankruptcy, so there was a lot of space.” That’s putting it mildly. No matter where you look, you’ll see the For Lease signs. Rugani says, don’t expect them to go away anytime soon. Commercial real estate, like the job market itself, is a lagging indicator. It will come back much more slowly than the stock market.
Up the Peninsula, we find a much busier, peppier office in San Francisco. Trulia is a dot-com bursting at the seams of its offices, with Macbooks lined up as far as the eye can see. On the screens, all sorts of mathematics Trulia uses to show how the housing industry is going. Unlike the commercial market, Trulia says the residential market is starting to pick up. Heather Fernandez shows us, in web form, how sales volume is rising, transactions are up, and “price reductions,” when people lower the price of their homes, has fallen in half.
All good signs, she says, if you’re patient. “They’re not gonna recover tomorrow, but they’re on the long road to recovery.” It may not sound all that rousing, but when it comes to the housing market, that passes for really good news these days. The signs will likely stay on buildings for a long time, but for a shot of optimism, just go home. In Silicon Valley, that’s where the growth is.
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