Six months into a pandemic economy, rifts in American inequality are deeper than ever. The picture is especially dystopian in Silicon Valley, where hundreds of thousands have filed unemployment claims while their Big Tech neighbors are minting millions of dollars a day. “Here in San Jose, you have a company like Zoom, which has seen its market cap grow exponentially, and just down the street you have families who not only don’t have broadband internet but are very likely to have lost a job,” says Jeffrey Buchanan, public policy director at Working Partnerships USA, a local community-labor organization. “The haves and have-nots have always been here in the Valley, but it’s only gotten that much worse.”
Last month, Buchanan and his team issued a report on one of the impacts of this economic disparity. While tech companies have seen skyrocketing profits—and many of their employees have skipped off to Monterrey or Park City to enjoy the perks of remote work—other families in Silicon Valley are bracing for an eviction crisis. With a statewide moratorium set to expire at the end of the month, Working Partnerships USA estimates there will be 43,000 families at high risk for eviction in Silicon Valley. “And that’s the conservative estimate,” says Buchanan.
With additional federal aid packages stalled in Congress and state legislators scrambling to find a longer-term solution, some Californians have suggested it’s time for the private sector to step in. Daniel Bornstein, a landlord attorney in San Francisco, told Curbed that rather than making his clients pay the price, he would “like to have seen 75 billionaires in the Bay Area put together a billion dollars for some communitywide bailout.” Certain billionaires have proven worthy candidates: Just last year, Salesforce CEO Marc Benioff spent $30 million on a research initiative to study homelessness. Elsewhere, Amazon CEO Jeff Bezos gave $98.5 million to organizations that help homeless families. Companies like Google and Microsoft have also pledged hundreds of millions of dollars to ease housing instability in the areas surrounding their offices.
In terms of actually improving the stock of affordable housing, though, tech hubs continue to struggle. That’s because, simply put, they still aren’t building enough. “The affordability and displacement crisis is caused primarily by an underproduction of housing,” says Todd David, the executive director of the San Francisco Housing Action Coalition. Housing has been an enduring problem in the area: Since 2000, the Bay Area added 380,000 new housing units, while it needed to produce over 1 million to meet demands, according to a report by the San Francisco Bay Area Planning and Urban Research Association. In an economic crisis, like the one induced by the pandemic, those shortages become even more apparent.
At the same time, the pandemic has freed up tons of new space—it’s just located in office buildings. Since the spring, 3.6 million square feet of office space has been listed for sublease in San Francisco, according to a report in Biz Journals—more than has been available in the city in the past 20 years. Startups are letting their leases lapse, while the city’s bigger tech companies, like Twitter and Box, are anticipating that some of their employees will work from home indefinitely. At Slack, which has extended its remote work mandate until at least June 2021, employees have been left wondering about what, exactly, would happen to the company’s 30,000-square-foot headquarters in San Francisco. Earlier this summer, one employee pointed out in an internal channel that while the company had diminishing needs for office space, the city was in the midst of a major housing crisis. If nobody would be working in the office for another year, wasn’t there something they could do with it?
Slack’s headquarters is filled with moss walls and wallpaper designed to evoke the splendor of the Pacific Coast Trail. It was not exactly clear how this space should be used to help people. Convert it to apartments? Turn it into a homeless shelter? The employee who posed the question didn’t have a specific idea in mind; neither did the executives. (It also turns out that Slack's lease prevents the company from using the office as anything but an office.) But the idea that empty offices should play a role in meeting future housing needs has begun to take root among housing advocates, researchers, and policymakers.
It’s not an entirely unprecedented strategy. In 2016, when Amazon was expanding its sprawling campus in Seattle, it realized that an old motel sat on the parcel of land where it planned to build. “It was going to sit vacant until our development cycle came around, and we were waiting to get our building designs and entitlement for the project completed,” John Schoettler, Amazon’s VP of global real estate and facilities, told Fast Company. Amazon reached out to Mary’s Place, a local nonprofit, and invited them to use the building as a temporary shelter. Four years later, Amazon maintains a partnership with the nonprofit, which now operates a permanent shelter in an eight-story building on Amazon's campus. Amazon employees work on one side of the building; Mary’s Place can house up to 200 people on the other.
David, of the San Francisco Housing Action Coalition, says tech companies are unlikely to do this on a shorter-term basis, given the legal liability. California law gives people rights once they've established residency in a building. A company like Slack, which won’t have any employees in offices for another year, could conceivably set up an impromptu shelter in at least one of its headquarters’ 10 floors—but David says it’s “a huge disincentive to that tech company to allow that use if, a year from now, the city is like, ‘Sorry, the people who were experiencing homelessness are now residents there.’” (There are some cases where regulators have stepped in to make exceptions in emergencies. When a massive fire displaced 58 San Franciscans in 2016, the city managed to offer victims temporary housing in vacant apartments through a Good Samaritan law, which gave them shelter without exposing landlords to the risk of those people claiming squatter’s rights.)
Since the beginning of the pandemic, cities across Silicon Valley and the Bay Area have scrambled to find temporary housing for people living in cars or on the streets, including moving people into vacant hotels. In March, hotels in San Francisco competed for City Hall contracts to put people up in their rooms. Eventually, though, hotels will return to their usual business—and many of those people will wind up homeless again, given the lack of affordable options in the area. Longer-term, David says, cities need to think about improving the amount of low-income housing available, not just focus on short-term solutions.
That’s where unused office space could, in theory, make space for new housing units—but only if cities radically rethink their zoning laws. “If the market demand for office space goes down and the demand for residential space continues to be there, having that flexibility to convert office space to residential is really important,” says David. Right now, though, cities like San Francisco don’t offer much leeway for the creative reuse of buildings.
This commercial-to-housing conversion has already begun in some cities, though so far it’s involved mostly malls and shopping centers—which were emptying even before the pandemic as consumer behavior changed. In Lynwood, a suburb of Seattle, developers are already at work dismantling the Alderwood Mall to convert it into a 300-unit apartment complex with retail space on the bottom floor. If legislators were to make new housing a priority—especially in places like San Francisco, where it’s remained an unsolvable problem for years—it could lead to a surge in mixed-use spaces where unused offices become modest apartment units.
Still, it wouldn’t be a silver bullet. Issi Romem, a fellow at the Terner Center for Housing Innovation at UC Berkeley, recently looked at how much commercial space in California could potentially be converted into housing should state lawmakers take action. Depending on how aggressively legislators move, he estimates that commercial buildings could increase housing stock growth between 5 and 40 percent. “The answer is that it’s a substantial amount, but it’s not enough to fix housing in the state in the grand sense,” he says. To do that, cities still need to rezone and continue to build more. In the meantime, the outlook in Big Tech’s backyard remains bleak.
Corrected 8-25-2020, 2:50 pm EDT: Issi Romem estimated that commercial buildings could increase housing stock growth between 5 and 40 percent, not housing stock as this article originally stated.
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