Tech execs increasingly moving away from Silicon Valley
The greater metropolitan area between San Francisco and San Jose, California, has long been associated with companies and engineers at the forefront of technological innovation. The region was thusly coined the "Silicon Valley" as early as the mid-70s, owing to the abundance of offices for major firms in the booming semiconductor business. The name only became more accurate and ubiquitous through the 90s and 2000s, as it hosted headquarters for some of the world's biggest tech companies, including Apple, Google and Facebook.
"More companies and workers are looking elsewhere for the next big tech hub."
Silicon Valley is without a doubt a cornerstone of America's wealth and economic activity. Consequently, it has also become synonymous with exorbitantly expensive real estate. According to Realtor.com, the median sales price for a home in the Valley rose 8 percent in the first three quarters of 2016 to reach $841,000. This puts a typical mortgage out of reach for even high-ranking employees at these illustrious businesses. As a result, many in the tech sector have found other parts of the nation more amenable, some of them in unlikely locations.
In a recent real estate trend piece, The Wall Street Journal spoke to a number of tech workers and executives who moved their families or, in some cases, their entire workforce, out of the Valley in search of more affordable housing and office space. This out-migration could become widespread, having a number of effects on the small- and mid-size cities that some are choosing over the Bay Area.
Many companies or individual workers choose to relocate in roughly the same part of the country. One popular West Coast destination is Eugene, Oregon. The college town of 163,000 is well aware of its status as a second option for Silicon Valley elite - its airport runs five flights each day bound for the San Francisco or San Jose area. A number of high-profile tech firms already have moved operations here. One tech CEO of a small software company told The Journal that his family moved from the Valley to a 2,200-square-foot, four-bedroom home in Eugene for just $300,000 in 2007.
Of course, several other cities like Boston, Washington, D.C., and Austin boast an outsized share of the tech real estate market. But just as in the Bay Area, these cities have seen rents and home prices explode in short order. That's made some small cities like Huntsville, Alabama, an unlikely destination for a number of tech businesses and their workers.
To accommodate a new influx of digital talent, the southern city of 164,000 has plans to install a state-of-the-art fiber optic internet service in the area. That level of investment has drawn notice from Silicon Valley expats. One executive explained to The Journal how he moved from the Bay area to Huntsville in 2013, buying a home outside the city on a 30-acre lot for $400,000. With all the extra land, he and his wife moonlight as farmers, raising pigs, chickens and crops for sale to high-end local restaurants.
In many regards, it's not so shocking that most of these towns would become "second cities" to established tech hubs. Eugene and Huntsville each benefit not only from proximity to bigger industrial centers, but also with a history rooted in manufacturing, making them more obvious choices for the modern equivalent of steel mills and textile factories. They are just a few examples of a broader trend toward decentralization that the U.S., and the rest of the world, have been seeing for years.