Palo Alto Transformed

Tim Knight from Slope of Hope's picture

From Slope of Hope: I've lived in Palo Alto since the summer of 1984 (it only just occurred to me typing these words that this is my 30th anniversary here - maybe I should get a cake or something). Think about how much the world has changed since then; in 1984:

  • The original Macintosh, complete with 128 kilobytes of memory, was the most sophisticated personal computer on the market;
  • Mark Zuckerberg was a one-month old, making dookie in his diapers instead of your social life;
  • The Cold War was going strong, with USSR-versus-US relations really the only thing a person needed to understand about the geopolitical world;
  • If you had a 300 baud modem to connect your computer to your telephone (as I did), you were in a very, very, very tiny minority of people who could log on to remote computers and exchange information.

Over the years, the world changed in many ways; there was the 1987 market crash; the dissolution of the USSR, the historic equity bull market of the 1990s, the Internet bubble, the 9/11 terrorist attacks, the housing bubble, the financial crisis, and now, the Central Bank bubble, which dwarfs everything that preceded it.

Through it all, though, the physical appearance of Palo Alto changed very little. There was plenty of turnover on University Avenue, which is the prime retail strip in town, as stores became progressively upscale, but the vast majority of commercial real estate in Palo Alto was the same drab, one-story (two, tops) bland construction that was built in the 1960s and early 1970s. Even at the peak of the Internet bubble, the buildings didn't change, even though rents exploded higher (my little company, Prophet, was shelling out nearly $20,000 per month in 2000 for a shabby old house in downtown Palo Alto, which we used for office space).

Recently, though, things have changed dramatically. I wasn't looking for it, but over the past few months, I've been overwhelmed not just at how much construction is going on around here, but how much high-end construction is happening. In Palo Alto and surrounding towns (like Los Altos and Mountain View), an increasing number of dentist offices, retail stores, and apartment buildings are looking like this (I just photographed this today):


Owners of land in town are realizing that they are sitting on solid gold, and they want to squeeze the highest possible price out of potential tenants. These days, that means one thing: well-funded startups. These firms have huge bank balances and will not balk at sky-high rents, because the expense is inconsequential compared to how much funding they are getting.

To attract this kind of tenant, though, you need A+ office space. It has to be new, hip, shiny, modern-looking, and really well-located. There's one key thing to understand about the employees at these firms: at the moment, they are living in the very best of both worlds - (1) they get the very high salary of an adult professional (2) at the same time, they get to enjoy the life of a child, with fun and games one of the principal draws to any prospective employee (For instance, as I was meandering downtown this afternoon, thinking about this post, I passed a startup called Kiwi whose lobby had a huge blackboard listing Activities This Week, which resembled something from summer camp - - - Frisbee, barbecue, ping-pong, etc.)

So, again, if you're going to create a Playground For Young Adults, you're going to need to spend big bucks. Thus, the construction site like the one I passed below has become ubiquitous: an old, small, wood house (traditional Palo Alto) right next door to a brand new zillion-dollar Fun Space For Twenty-Somethings being constructed as swiftly as possible (this picture doesn't do it justice, but the fabric triangles at the top appear to be some kind of luxury rooftop eating area for when it's done).


When all the dust settles, Palo Alto is definitely going to look a lot more modern (and heterogeneous, like the picture above) than it did when I first moved here. All I can say, though, is that when the current bubble finally bursts, whether it's next month or next decade, there are going to be an awfully lot of expensive, empty, class A office buildings situated around town, holding nothing but the memories of ping-pong games past.

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Never One Roach's picture

City Councils have a lot to do with this type of massive overpsending and 'repurposing.' I saw it happen in Austin Texas where those quaint streets were torn down for sky-high condos [87% owned by Californians] when the city council became over run by builders and developers and lots of money was probably changed hands.


Bucolic cow pastures, safe streets and clean air became only a memory in Austin in the first decade of the new century and that's when most of my friends [native Austinites] and I moved  to cleaner, safer areas. Austin is now rated as the "Most Congested Mid-Sized Merikan City." That, along with the soaring violent crime rate off 6th street would be some reasons I would never move back there.

Some change is good; some change bad.

int19h's picture

Wall street,oligarchs,corrupt chinese..etc provide the money.

VCs (the pimps) indiscriminately spread them around like betting at horses or the craps table.

Infinite supply of young, naive, wide-eyed "founders" ready to whore themselves out to chase their dreams.

normal non-startup working people getting screwed over because of rising rents + living expenses and not-so-fast-rising salaries.

when this all blow to hell (estimate: 2-3 years), the pimps/wall street will be unscathed and the normal folks will get screwed again by getting laid off.

the best outcome for normal folks is to hope that they make enough to come out ok (e.g. like by making risky career moves) when this blows up.


Shizzmoney's picture

For instance, as I was meandering downtown this afternoon, thinking about this post, I passed a startup called Kiwi whose lobby had a huge blackboard listing Activities This Week, which resembled something from summer camp - - - Frisbee, barbecue, ping-pong, etc.

fucking corporate white people man

Zeta Reticuli's picture

Sounds like activities for children, not adults.

Whitehall's picture

Driving around San Jose, just to the south, I was struck by how much commercial construction was going on. My wife works at Stanford.

My guess is that our super low interest rates have something to do with it but....

We've a family friend who sells high-end residential real estate. His view is that foreign money is driving much of our local boom. Globally, it has become a diversification strategy for one's wealth - you know, 10% in bonds, 50% in equities, 10% in California real estate, etc. ROI on local real estate has long been very high, especially leveraged.

I suspect commercial real estate is booming for many of the same reasons residential real estate is, save the safe haven aspect.

MeBizarro's picture

I know for a fact from a good Indian friend from Habitat who does a lot of real estate deals that it is a ton of Asian dollars from several countries including India, China, Hong Kong, Singapore/Malaysia, etc that investing big dollars in the Bay Area especially in the South Bay/Silicon Valley area.

Randy Goodnight's picture

Tim Knight is a dope.  Sorry dude.  If you're going to write about "The Valley" at least give people from other parts a real sense of what goes on around here.  Why does ZH print this childish drivel?

From my personal experience: Commercial RE in this area Palo Alto, Mountain View, is still booming and will for some time.  Yeah, there are start-ups that will flame out. But not Google and the big companies.  They have senior brain power working in tents while space is being built out.  Hiring still continues including H1B types. I’ve confirmed with acquaintances in both commercial RE and employees at Google, Apple, etc.   

Residential is still booming too.  Multi-Million dollar renovations in Atherton, Menlo Park, PA and Mountain View are still common.  The reasons are clear, salaries, benefits and stock options support the growth. Yes, it is sickening to the average person (me) to learn about the perks of working for tech companies.  Basically, it is free everything . . Meals, transportation, entertainment . . . on and on.  So they can throw all their money into RE and they do.

The area was not really hit by the “downturn”.  If you had/have real skills you have employment.  Still true.  The first tech bubble had many more BS companies that would hire anyone with a pulse.  They all crawled back “home”. 

Finally, there is the growing segment of those leaving.  There is a breaking point (I am close) whereby if you are not already firmly locked in with home ownership, solid work and backup network just in case, it won’t be worth the effort to stay here.  Rents are tight (hard to find) and keep going up.  I know many who are recently forced out as owners want to take advantage to the “hot real estate market”.  Personally speaking, employment, weather and general quality of life still trump leaving . . . but just barely.

kareninca's picture

"From my personal experience: Commercial RE in this area Palo Alto, Mountain View, is still booming and will for some time."

Well, the downvotes show that readers can tell you're an idiot.  But specifically, if the commercial RE market here is so great, how do you account for the huge numbers of empty storefronts on El Camino?  There are LOADS of them, and they've been empty FOREVER.  And a lot of the "filled" ones are ridiculous "exercise" places (someone puts a bunch of stationary bikes in a storefront to make it look occupied); give me a break.

"If you had/have real skills you have employment."

You are so full of shit.  I know many, many highly skilled people around here who can't get work.  Their sin is that they are over 30 years old.  I also know plenty of highly skilled people who left during each earlier bust that I've been here for (I've been here 18 years); if people didn't flee we'd really be overrun by the overqualified unemployed.

"Multi-Million dollar renovations in Atherton, Menlo Park, PA and Mountain View are still common.  The reasons are clear, salaries, benefits and stock options support the growth."

No, it's people from China bringing in their corrupt/stolen hot money.

You don't know this area at all.

Randy Goodnight's picture

Sorry Karenica but your story doesn't reflect my experience here.  I don't know why all the haters down vote but I'd like to better understand their POV.

I always find it useful when people write about what is happening in their "backyard"  Hopefully, nothing I say or said in taken as the riteous word.

My answers to you:

For those that don't know the area, El Camino is a long Blvd. that goes North-South from about S. San Francisco down through silicon valley and beyond.  You are talking a few RETAIL storefronts that maybe affected by high rents.  How many Jamba Juice and other type stores do we need?  Also, as mentioned many tech workers "live" on company campus.  Again, Google, LinkedIn, Apple  . . . all have multiple gourmet eating options on their campuses.  Gyms, concerts by recognized artists.  They don't need most commercial services other than restaurants.  I have friends, aquaintances that all work at these companies and I hear the same stories, unsolicited by me.  It seems the hip new thing here is Google delivery.  I see 10-20 vechicles with their logo on them within a 4 mile area every day.  By commerical RE I was focusing on tech companies and their need for more space as Tim inffered in his "article".  Again, these are first hand accounts.  I rent 1,000 sq ft. space in Mountain View.  My very nice landlord has multiple properties (retail, light industrial, homes) that have been in his family since there were chicken farms here.  I don't question his experience - (I know nothing about yours).  He talks with other property owners.  They have no trouble being 100% occupied.

Sorry the people you know can't get work.  I don't know what to advise other than keep trying and try to build a personal network.  Everyone I know from CEO's to engineers in the tech field seem to change jobs every couple of years.  Those elders (I'm over 50 too) still seem to find a gig even as they get laid off or their company flames out.  You just have to hustle.  I don't have a degree, I'm not in tech, I switched careers a couple of times in my life and I can still survive here.  I know plenty of people outside of tech that know how to hustle as well.  They just seem to figure it out.

While I agee there are more and more Chinese and other nationalities that seem to be doing well and buying homes here.  I think your perception is misleading.  Again, I know first hand many that have done exceptioanally well because of options, selling their company, etc.  They think the real estate market is crazy too, but they didn't create the game.  I bet every one of them would agree being in the right place at the right time had a lot to do with it.  You can't hate them for it.

Lastly, Karenica (and the down voters) - try not to be so bitter!  It was a nice sunny day here (a little breazy).  Nobody is bombing us, there is food on the shelves, you can hike, bike, walk, go to a park, count the Teslas that go by.

kareninca's picture

You spend your time among people who are doing well  -  it is a self-selected set.  Necessarily, you don't see the innumerable people who have "fallen out" of the system.  Because of my volunteer work and social life, I see them.  Yes, I also see/meet plenty of people who are doing well; my family is doing just fine.  You just don't seem to get that you are looking at a very specific subset of people; you are clueless about what is the norm.  No-one wants to notice people who aren't doing well; it's inconvenient to their world view.

I bet you sell real estate.

Seeing Red's picture

Everyone I know is over 50 (including me) and no one is out of work.  Some of us occasionally move from one company to another for differing reasons; there are jobs here if you have useful skills.  Now if your goal is to work at Facebook, Google, or Apple (perhaps so you can live in Palo Alto), the age factor might be very different of course.

p.s.  High-Tech companies generally don't want to be located on El Camino, sorry.  Are you aware of the term "industrial parks"?  Like it or not, that's the main CRE market now; no one is saying Mom & Pop stores are booming ....

kareninca's picture

Oh, I see.  Retail property, on the busiest route in the area, "doesn't count" as commerical real estate.  I guess if you make your definition of commercial real estate very, very narrow, it is doing just brilliantly.

Whitehall's picture

I've always seen most parts of El Camino as kinda dumpy, plus it is often difficult to get to most stretches from the freeways.

flysofree's picture

Why don't you move to Oakland, prick. Then you can tell us how awful the place is. I remember a friend  who got job over there in 1970s and told us that everyone had bars on windows. What the hell, we didn't even lock doors back then in Madison, WI! 

There is a lot of high end retail space going in las Vegas too--sticking my tongue out.

I bet Oakland changed over the last 30-years and I can only surmise that the purpose of your story is too gloat that you live amongst financial and tech thieves in some of the priciest real estate markets.

But, you didn't make Palo Alto, the rest of world did, asshole.

Thirtyseven's picture

No worries, diversity coming to Madison all too quickly.  Haven't you guys already experienced the knockout game up that way?

MeBizarro's picture

I lived in Palo Alto for a few years after the tech crash in the early 00s and they had already changed a lot of the zoning laws even then as money started to really pour in and a lot of older homes were torn down with big, new modern ones built which were 2-stories and as big as the lot would contain.  I went out for a wedding last year and couldn't get over Palo Alto had changed in several years. 

Reminds me of the Avalon on the East Coast in the Jersey Shore or parts of Northern Virginia that have completely changed even since '00 from a housing stock standpoint.  Pockets of concentrated with a lot of poverty especially when you go to my hometown of Reading, PA or visit friends in Western PA.

ken's picture

New uglification. Great.


Gmpx's picture

Right. And it is too far from surf

ebworthen's picture

Good riddance CA.

The entire nation has sacrificed reasonable family homes and decent career jobs for brass ring glory for a few and obnoxious McMansions or Glittering Palaces of Terpitude.

What you see in Palo Alto is a reflection of the decay of America; not just one town.

Sold out, down the river, crossed the Rubicon, happy days long gone.


Seeing Red's picture

Right!!  Those lazy engineers in CA along with the farmers should just secede and KEEP all that federal tax money that gets spent in other states!  That will show 'em!

ebworthen's picture

There's decay like Detroit, and then there's decay in glittering glass palaces that produce next to nothing once they are built.

Like I said, a few brass rings instead of a wooden horse for everyone is not progress.

Seeing Red's picture

I'll simplify this for you.  This is Silicon Valley.  Deal with it.  If you can't, why not get off the Internet.

p.s.  I loathe McMansions myself, but I defend people's right to buy them (land IS expensive here ya know).

MeBizarro's picture

He is generally an a-hole irregardless of the topic 

ebworthen's picture

A cynic or a skeptic I will agree to; the other one doesn't sound like me.

cowdiddly's picture

Please do and don't come back.

Seeing Red's picture

Agreed!  It would be highly amusing to see folks like you attempt to pay for paving your own roads.

cowdiddly's picture

I own 680 acres fucknuts I built my own roads

Seeing Red's picture

That's cool actually.  I take it you never have to leave your property, and neither do your equally enterprising neighbors, and trucks never pick up or deliver anything (no need for highways), so you're right -- no problem.  I'm learning a lot here.

cowdiddly's picture

There again I have 2 semi- trucks for hauling cattle corn and wheat  and 4 1.5 ton trucks nah nothing gets delivered here lol. I can assure you I pay hadsomely for the other roads I turn out on. and my unproductive neighbors look down their nose at my tiny operation, they don't produce anything either to feed your fat ass. lol.

Seeing Red's picture

Sounds like you're not part of the problem (congrats!).  But my comments stand on a macro basis, even if they don't apply to you.  I enjoyed your input (no sarc).  Feel free to make a parting shot, though -- I'm sure it will be good ....

cowdiddly's picture

Nah no parting shot. Just 2 complete opposite worlds. I certainly would not understand or prosper in yours. I'm a self professed hillbilly so when somebody calls you one, well if the shoe fits Cinderella, I wear it. Ha.

Actually, eons ago I was stationed for a while in California when I was a kid in the service. I got the hell out of there as fast as I could, It was not for me but to each his own.

Seeing Red's picture

Your "Ha" -- nice :-)

I do engineering; it's fun designing hi-quality stuff (a lot of which gets exported and helps our trade balance).  It's kind of like being paid to solve a really hard puzzle, so it can be fun (but management is often incompetent).  I have a LOT of respect for farmers and ranchers though -- I'm a total believer in a diverse economy.  Weather here is great, but way, way too many people.  But at least our state gov't is the best (snort!).


Dear Mr/Mrs. Junker:  Care to explain what your problem is?  I'm curious ....

Skateboarder's picture

It's Jean Claude Junker. ;-)

boeing747's picture

The picture shown is the first small glass office building (?) next to El Camino Real. I have something to do with 2nd glass building also next to El Camino Real.


algol_dog's picture

Looks like Alma Street -

boeing747's picture

Many houses in Palo Alto are $5000 homes built for WWII veterans 60 years ago: flat roof, no crawl space, no attic. But now Palo Alto becomes the epic center of real estate bubble. Many of those buyers will end up in tears few years later.

onelight's picture

They were Eichler homes, classics from the '50's father bought one from Joe Eichler in Sunnyvale in the late '50's...$17,000 by then w/ small down, and you were they are million dollar homes, the ones in Paly area...lots of wall glass, interesting design a little reminiscent of Frank Lloyd Wright but R factors not so good...still, those were the days.. 

Thirtyseven's picture

Epic Center....hmm, I think that one'll catch on.

janus's picture

how's it hangin, sloper?

you know, when i was readin the part about you wanderin around thinkin of what's best to be thought, the thought occured to janus that he should likewise think...but before my thinking arranged itself such that i could make some solid and cogent concept of things, i pondered over events and my relation to them.

sloper, i'm what they call an ornery cuss...but, i ask you, can the leopard change its spots?  no, sloper, the leopard is helpless in auto-spot removal.  and so it is with janus.  but i do try...oh, Lord, how i do try!

for instance, i've recently sworn-off racial epithets and pejorative homo-related phrasology for good.  i'm a changed man, sloper.  plus, it's ever-so important we all abide the ZH racial discrimination policy.  which states, essentially, that we are all going to hell in a hand-basket and there is no salvation for any of us...amen.

and so i'm in something of a quandary.  you see, i've been trying to come up with a word for 'stingy';an adjective to best describe our current president.  and since i'm trying to be mindful of all cultures, ethnicities, creeds and sexual what-have-yous, i'm at a lost.  all available words and phrases have been used to deride scots, jews, chinamen, queer polynesians (you name it!)...there is for the sensitive ZHealot no appellation both acceptable and apropos our beloved POTUS...alas!

but hark!  through yon window breaks my muse!  what heraldeth she at this late (but likewise early) hour, just as Venus peaks above the horizon?  why, Calliope is carrying with her a word.  and a perfect word it is.

it's like this: ole husaine obama is carryin on just like every tyrant of ages past.  make all men slaves such that he may be free.  same ole/same ole.  yawn...sic semper tyrranus...don't bore us, get to the chorus...okay, the word the muse brung me what-for to describe this stingy hoarder of freedom and liberty, buyin up billions of rounds and bunkers and bullet-proof beast-mobiles...well, ZHealots, it's been right under our nose this whole time.

obama is a niggard.  very, very niggardly hath he gone about his duties as president.  exactly what you'd expect from a niggard.  low/down, no account niggard.  it's just the niggard way.

{P.S. i once met this band in an elevator in atlanta...i told my young sons -- "back up sons, these boys are musicians; they're altogether dangerous, and they're liable to do just about anything for attention."  spoon had themselves a good laugh -- true story}

fear the underdog,


lasvegaspersona's picture

The crack up boom will be briefly glorious. Reality eventually intrudes.

potato's picture

zero value-added. How much more would this country prosper without wasting millions of hours on social media bullshit.

Seeing Red's picture

Right -- because an expert like you KNOWS there's nothing else going on in Silicon Valley, even though "silicon" refers to hardware, not software (and ALL software is social media).

p.s.  Agree with you on social media bs though.  Did not junk you.

laomei's picture

Oh america and your shitty cardboard boxes passing as "homes", that's the funniest part of all of this.

Dead Man Walking's picture

They need to be hollow to accept chinese versions of jimmy hoffa.

Playtime's Over's picture

I went out there for a job offer in 1997 and thought they were offering a fortune UNTIL I checked living expenses.  $1500.00 a month for a room. Crazy shiiit.  I got back on the plane.  I'm glad, Cali is a crazy nut hole.

I Write Code's picture

Yeah, but it's actually quite strange how *little* Palo Alto has changed since 1984 - or about 1970, that I can vouch for.  I was driving around up there about a year ago and it was spooky.  I think most parts of Los Angeles and surrounds have changed more, for better or worse.  San Francisco has had several waves of development in the same period.  The Stanford campus has changed quite a bit, in many details, I guess they just completed the bloated new engineering quad that looks like a set for Logan's Run.

Given the simply oceans of new money sloshing around the peninsula I'd expect El Camino Real to be lined with new 80 story buildings instead of zero.  And it may get there yet.

... oh, that the San Andreas Fault is immediately adjacent?  So what.  They'll float the foundations on pools of big data or something.

onelight's picture

Some serious zoning going on there, always has been; height limits on office bldgs in the downtown, after the one 15-story bldg went in decades ago on University. I grew up north of there and delivered the Palo Alto Times (long gone) as a kid. Every time I go back I feel like Rip van Winkle...and yet the creative energy vibe is still there, partly due to Stanford (Go Bears); it's grown up a lot but still seems bucolic in places (professorville at Stanford is still a little like the Shire) and Steve Jobs lived in a modest bungalow in neightborhoods that now are way way spiffed up from what I knew riding around as a kid on a bicycle, and people kind of checking now as you drive through; never was like that although I guess I understand.

The global tech influence is still ahead of the local curbside ambience, despite all the new buildings, though if you go to the Rosewood Hotel on Sand Hill you see some of the cosmopolitan groove, in what was forever an empty field I recall driving by a kid in backseat of station wagon with no thought to luxury cabanas for Chinese moguls et al that are there now (went there for a beer just to see it; felt a little like a hayseed but a few old-timers were there to translate).

PA is still a sleepy place kind of; many of the known names are homebodies actually, not a NYC nightlife scene, active but strictly suburban; burgers at the Goose or old Zotts but better at the O. I go through like a tourist now, remembering and wondering; Palantir I heard is the big tenant in the Paly downtown; has some of the second-floor space that Facebook used to have; that says something. And FB's in Sun's old campus on the east side of EPA, by the old salt flats, south of the old dump I knew from my yardwork business in days of yore. 

Freddie's picture

F Sillycon Spy Valley.  They all make spyshit and the rest of the world will hopefully find major work arounds to the crap they spew out of the Stanford area.    Stanford and Cal Tech have always been MIC. think tanks and other scum like the Rand Corp.  F em.   I hate the vibe.  Just like AH's in So Cal pushing scripts to shit movies - SillyCon Valley is always pushing the next cool app.   Childish crap. 

Some of the better stuff is being done iN Europe and other places.   I loved the Microsoft guy having a major meltdown how all USA tech has been smeared as spyware crap.  LOL!   Gates and Buffet love O and the police state.