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Overhead of downtown San Jose. (PHOTO: XATSUKEX/WIKIMEDIA COMMONS)

Rust Belt of Silicon Valley: San Jose Is Dying

• September 10, 2013 • 7:47 AM

Overhead of downtown San Jose. (PHOTO: XATSUKEX/WIKIMEDIA COMMONS)

As Silicon Valley’s focus shifts from hardware to software, its center is moving north, leaving behind a trail of decay.

From Silicon Prairie to Silicon Roundabout, contenders for the next Silicon Valley abound. What about the next Rust Belt? Look no further than Silicon Valley itself. Venture capitalist Danny Rimer: “The closer you get to San Jose, the more of a Rust Belt it has become.

Unwittingly, Rimer makes a contribution to urban economic geography. Touting the shift in gravity from San Jose to San Francisco won’t surprise anyone. However, he notes the dramatic change as most striking after spending the last few years toiling in Europe. Back in the States, we frogs slowly brought to a boil have failed to appreciate the decline. The tilt in innovation now favors software and services, modes of production well-suited for the city. The old horse of Silicon Valley, hardware, is a manufacturing process and requires more land. Its raison d’être migrating to cheaper locations, San Jose is dying.

What’s so remarkable about that? Rimer describes San Francisco as a producer city, not a consumer city. Edward Glaeser defines the abstraction:

Increasingly, urbanists draw a distinction between producer cities and consumer cities. Producer cities grow because of the desire of firms to locate in a particular place where economic returns are higher, while consumer cities thrive because people want to live there. Over the past 50 years, consumer cities have enjoyed increasing success, largely at the expense of producer cities.

The overriding logic of gentrification in San Francisco is one of production, not consumption. The pattern of real estate appreciation looks like transit oriented development (TOD) facilitating the journey to work. Those damn Google commuter buses:

Ground zero for this growing array of grievances is the Mission District, a historically working-class Latino neighborhood where Victorian flats and newer lofts have been overrun by techies.

Heated bidding wars — especially in a half-mile radius of shuttle bus stops — have broken out, causing rents to soar, even double in some cases. Along shuttle routes, trendy new restaurants that serve high-end food and spirits have taken the place of corner stores and mom-and-pop businesses.

Anti-Google graffiti has turned up here, and activists recently held a small anti-gentrification rally at which they smashed a Google bus piñata. Last year, a Google bus driver was caught on video threatening a bystander for photographing a shuttle blocking city buses and bicyclists.

Emphasis added. Production in the suburbs and exurbs is driving residential location decisions in the city. Rimer really didn’t talk about this relationship. He’s onto the next big trend in San Francisco, software and service production agglomerating in the urban core. As more jobs become available in the city proper, more workers can ditch the commuter bus for a brisk walk to the office. What’s to become of the dense office parks at the other end of Silicon Valley? Take a tour of another valley, carved out by the Monongahela River in Southwestern Pennsylvania.

Jim Russell
Jim Russell is a geographer studying the relationship between migration and economic development.

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