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Article : The Facebook Effect on Real Estate Prices
 

Four years ago, Facebook announced that they were decamping to Menlo Park from their longstanding home of Palo Alto. Just last month, the company finally cut the ribbons on a beautiful 430,000-square foot building designed by Frank Gehry that is basically one giant, open-air room with an enormous park on top.

The effect on the prices of surrounding real estate has been profound.

If you look at the chart below, published last week in the Almanac and Palo Alto Weekly, the price increases are mainly concentrated in Menlo Park and the neighboring city of East Palo Alto.

East Palo Alto is a historically black and now majority Latino community that took shape more than half a century ago through a legacy of racially discriminatory practices in Bay Area housing markets. Given that it is the most affordable community left in Silicon Valley, the city’s economy also supplies low-wage labor to the neighboring affluent suburbs of Palo Alto, Menlo Park and Atherton. It has a resilient, but sometimes painful history.

Given its market capitalization and position, Facebook is the company in the best position to re-imagine what new urbanism looks like in the old heart of Silicon Valley. In February,they acquired a 56-acre piece of property in Menlo Park for an estimated $400 million and have signaled that they are open to doing more with it than just office space.

So far, they’ve had to go and assure nearby residents in low-income neighborhood of Belle Haven that they are not going to be erecting nine-story buildings on it.

But they should build high and they should offer meaningful concessions — in the tens or hundreds of millions of dollars — for appropriate infrastructure or permanently affordable housing in a quid pro quo deal for dense, tall and walkable workforce housing in a mixed-use, mixed-income environment. If they’re successful, they could demonstrate to the surrounding communities that post-suburbia isn’t so scary after all. That would be the real Facebook effect.

 
Auhor : Posted on 29 April 2015, 07:09:25
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