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San Francisco’s Detroit Moment

• February 01, 2014 • 4:00 AM

A cable car ascending Hyde St. (Photo: John O'Neill/Wikimedia Commons)

Don’t be surprised when, in 50 years, the structures being built to accommodate the spread of Silicon Valley are left abandoned and crumbling.

If one were to compare Boston to Detroit in 1960, certainly the judgment would have been that Detroit was the more dynamic metropolis.” By some accounts, Detroit was the wealthiest metro in the United States at that time. In 1970, Detroit was 6th in per capita income. First place belonged to the combined statistical area (CSA) of San Jose-San Francisco-Oakland. More recently (2009), the Detroit CSA ranked 52nd. The San Francisco CSA was (is) still number one, half a century of economic dominance that is already begun its Detroit-like decline:

In early 2005, as demand for Silicon Valley engineers began booming, Apple’s Steve Jobs sealed a secret and illegal pact with Google’s Eric Schmidt to artificially push their workers wages lower by agreeing not to recruit each other’s employees, sharing wage scale information, and punishing violators. On February 27, 2005, Bill Campbell, a member of Apple’s board of directors and senior advisor to Google, emailed Jobs to confirm that Eric Schmidt “got directly involved and firmly stopped all efforts to recruit anyone from Apple.”

The wages in Silicon Valley are too damn high. Better move your bootstrap start-up to St. Louis and beat the coming collapse. The gloves are back off in the war for talent. The scramble for office space is the leading indicator:

Competition for talent prospects was one of several employer issues at the event that reflect side effects of a rapidly improving regional economy. While most economic indicators point to continued growth in 2014, the region is also at an inflection point for managing that growth. …

… On the ground, economic growth will likely manifest with another busy year for real estate developers. As perennial strongholds like Palo Alto and Mountain View look to maintain momentum, developers are also circling lesser-known cities like Santa Clara and Redwood City for dense mixed-use projects.

The real estate boom could also push some existing companies out of the Peninsula and pricier South Bay markets. San Jose neighbor Milpitas and Fremont are two potential candidates to cash in on higher prices in better-known employment hubs, said Cushman & Wakefield Regional Research Director Petra Durnin.

In search of lower rent, innovation is sprawling, not agglomerating in San Francisco. Tech companies get squeezed at both ends with soaring salaries (hence collusion to refrain from poaching talent) and the rising cost of office space. Once again, scarcity is the mother of invention:

In Shenzhen, the goal was to “create that sort of bubbling energy you would find on a really vibrant campus” by giving employees every opportunity to share ideas. Tencent, the fourth-largest Internet company in the world, has seen revenue double in the past two years, and sees fostering teamwork and connection between employees as a significant aspect of its future growth. Set for completion in 2016, with roughly 2.6 million square feet of space over 55 floors, the new headquarters will add space for 12,000 more employees.

“We did a lot of research about campuses, and we applied that to a tower,” NBBJ’s Jonathan Ward, a design partner, tells Co.Design. This meant pulling apart the design for one single tower into two separate buildings connected by three large skybridges that would function like quads, becoming places where employees could mingle and interact. Called links, each one of the connections is designed to foster something different: “culture,” “health,” and “knowledge.” Each link features a plaza surrounded by seating, cafes, and snack shops to try to encourage interaction. At the bottom of the building, the “culture” link symbolizes reaching out to the city, with Tencent Expo, a gallery about the company that’s open to the public, an auditorium for cultural events, and a lobby that’s open on both sides of the building for people to pass through as they make their way into the high-tech Nanshan District from other parts of the city. In the middle, the “health” link has a juice bar, game rooms, a basketball court, and a fitness center. At the top of the tower, the “knowledge” link contains company-wide meeting spaces.

That’s right. The superior innovation environment of the suburban campus is repackaged as a dense high-rise that can fit in a city where the rent is too damn high. Towers will spring up in Bay Area greenfields, just like Detroit back in the day. Fifty years going forward, these hulking structures will be suburban ruin porn and people will be shocked that San Francisco used to be the wealthiest city in the United States.

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

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