The Rise of Downtown Chicago: Microsoft’s Way to become a Silicon Valley Hub in the 2021-2020 Era, As reported by Michael Edwards
The proprietor of the Chicago loop alliance, Michael MEdwards, has been watching the slow return to downtown offices. He started going to his office again in the spring of 2020 after biking past boarded up buildings on the street. He noticed that there was no suited up business people who used to commute with him on the train.
A plan that the city is developing to convert office spaces into 1,000 affordable housing units, along with 30 percent of them affordable, is exciting for Mr.Edwards. More people could easily commute to jobs in the downtown area.
He notes that there are about 40,000 people in the downtown loop, up from just under $13,000 a decade ago. The higher rents in the loop are a sign that more and more people are interested in living in the city.
“You’re in the middle of everything,” said Mr. Edwards, who used to live in the Loop. You have two hours of commute time back after a 10-minute walk to work.
Lower Manhattan offers a model of the possibilities of turning a commercial neighborhood into a partly residential one. Facing financial difficulties in the early 1990s, New York State passed a tax abatement program, called 421-g, encouraging the conversion of old offices into housing. Over 13 million square feet, or 13 percent of Lower Manhattan’s office real estate, was turned into residential space over the course of a decade.
When Microsoft President Brad Smith announced in February 2021 that the tech giant had purchased a 90-acre plot of land in Atlanta’s westside, he laid out a bold vision: The company, he said, would invest in the community and put it “on the path toward becoming one of Microsoft’s largest hubs” in the United States.
The announcement promised the construction of affordable housing, the help of public school children to develop digital skills and support for historically Black colleges and universities, among other things.
Two years later, Microsoft said it would be eliminating 10,000 jobs and making changes to its hardware portfolio. A Microsoft spokeswoman told CNN that the Atlanta campus was put on pause to do with the moves.
She said all of the promises were out of the window, such as Microsoft creating jobs in the area, and a grocery store here. The consequences are still felt in the neighborhood.
As the tech industry boomed in the United States throughout the past decade, cities across the country vied to become tech hubs. State and city officials competed for Silicon Valley giants to bring offices, data centers and warehouses to their communities in hopes of creating jobs and bringing other benefits that cash-strapped local governments might struggle to fund on their own. In May of 2017, 238 communities submitted bids to be home to Amazon’s second headquarters and some even offered major tax breaks or the name of the city of Amazon.
The rise of remote and hybrid work had been a major driver in tech giants cutting back on their real estate investments, Yasukochi said. Then came the measures to cut costs.
Facebook-parent Meta, Microsoft, Salesforce and Snap have each shuttered offices or announced plans to cut back on real estate, according to recent corporate announcements, filings and local news reports. Tech companies say they will let leases expire or go completely remote. Mark Zuckerberg said his company is changing to desk-sharing for people who already spend most of their time outside the office.
The effect of those pullbacks can already be felt across the country, from New York City, where Meta reportedly scaled back its real estate footprint in the Hudson Yards neighborhood, to San Francisco, where some local businesses say they are facing the ripple effects of remote work and multiple tech office closures.
The executive director of the Tech Insights Center at CBRE said that “Tech had gained a lot of market share to become the top industry leasing office space across the US.” The finance and insurance companies overtook the tech industry to win the most office leases in the U.S. in 2022.
Over the past few quarters, the tech industry has been decreasing its leasing activity. The biggest impact on layoffs and austerity measures has to do with the decline in tech industry leasing activity.
Microsoft’s Quarry Yards in Atlanta and the Kirkland City Council: How Google Came into the Vicinity of the Real Estate Market
The quarry has been a source of hope and promise, though it hasn’t brought anything yet. In 2017, Georgia officials included the formerly industrial area on a list of sites where Amazon could build its second headquarters, as part of its pitch to the e-commerce giant. After deciding to go with other cities, AMAZON was taken over by another Seattle tech giant four years later.
After the purchase, Microsoft described Quarry Yards as a place with “wide, tree-lined streets” but “broken sidewalks.” The area, Microsoft said, is “food desert with no grocery store, pharmacy or bank.”
Hope said the community consisted of a lot of elderly, black neighbors. These residents, she said, have been worried about gentrification and displacement for years as housing prices and property taxes surge in the metro Atlanta region.
“Just the announcement of Microsoft coming into town” brought new buyers and developers into the area, she said, exacerbating these longstanding concerns. Home values in the neighborhood increased at a much faster pace than the Atlanta as a whole between January 2020 and December 22nd, according to data from Zillow.
But residents also had cautious optimism about the benefits Microsoft promised to the community, according to Hope. Now, the community is left with higher prices but none of the promised improvements or economic opportunities. She said that there wouldn’t be any benefits and they would deal with the consequences.
Silicon Valley is not the only region where Hope’s community is confronted with the whiplash of real estate market. According to the press release from the city of Kirkland, Washington, it was discovered by Google that the proposed new campus wouldn’t happen.
In a Kirkland City Council meeting held just last summer, representatives from Google teased a slew of community benefits from the build — including infrastructure improvements, such as the creation of bike lanes and pedestrian trails, as well as a more than $12 million investment in affordable housing. The city has been working with the city’s owner, Google, on planning since the fall of 2020.
Source: https://www.cnn.com/2023/02/14/tech/tech-industry-real-estate-pullback/index.html
An Irish Bar and Restaurant Owner Isn’t Looking Back: The City of San Francisco Facing the One-Two-Year Silicon Valley Pandemic
Even San Francisco, whose fortunes are tied to Silicon Valley more than any other city, is showing signs of strain from the one-two punch of the shift to remote work and office closures.
In the final three months of last year, the office vacancies rate in the city hit a record high of 28.6%, compared to 3.0% in the pre-pandemic period.
Mark Nagle, the owner of a 21-year-old Irish pub and restaurant in downtown San Francisco called The Chieftain, told CNN he has witnessed a “cascade of closures” of tech and corporate offices in his neighborhood recently — including the shuttering of a Snapchat office just down the street.
“We’re in a great location normally, we’re downtown,” Nagle said. His business is surrounded by several vacant retail spaces and several lots that are under construction.
The number of workers regularly coming into the area has not bounced back since the start of the pandemic, Nagle said, and neither has his business. Workers stop by for a drink after work and the events and meetings that used to be hosted by nearby companies have largely stopped being hosted.
He said that it is made the business much more unpredictable because they are making do with less. “And we’re one of the lucky ones that can keep their doors open.”