The Google Effect and Rising Property Values
Posted on August 10, 2017.
The summer months have provided their fair share of development buzz in Downtown San Jose. The most notable of which has been the announcement that Google is in exclusive talks with the city to build a new campus on the land around Diridon Station. This land was originally acquired roughly a decade ago with the intent to build a new A’s stadium and move the baseball franchise to the South Bay. Now, with the help of developer Trammel Crow, Google intends to build an 8 million square foot campus in the 240-acre area around Diridon Station with the potential to house 20,000 employees.
Since the June announcement, buyers have begun to flock to the South Bay looking to reap the potential benefits that may accompany this new development.
These buyers are seeing the direct impact on the real estate market and the increase in value that surrounding properties will see with the influx of this major employer. The value of this news is now tangible as agents in the area are reporting statistics that support a positive correlation.
One community in the immediate area that has seen early indications of an upward shift is Parkside. This unassuming community was built in 1987 and has remained relatively untouched, leaving it one of the more affordable places to buy in Downtown. As recent as April 2017, prior to the Google news, a fully renovated two-bedroom, two-bathroom condo in this building sold for $580,000.
Since the news of Google’s development broke, the sales in this building have been unbelievable. Tony Sum, co-owner of Silicon Valley Lofts & Condos, most recently sold a 2 bedroom, 2 bathroom at Parkside and set a record for the community. Listed at $550,000, this condo received a handful of offers before the first open house and sold for $705,000. That is a whopping $155,000 above asking and $67,000 more than the last 2-bedroom sold earlier in the month.
By late July, home prices surrounding Diridon Station jumped 7% over the course of a month. The new Apple Campus in Cupertino is the closest parallel to this magnitude of development and the resulting impact on real estate values. The surrounding area within an approximate two-mile radius of the Apple development saw home prices rise by about 50% in a two-year period.
It is evident that the announcement of a Google Campus in Downtown San Jose has been a catalyst for rising property values in the immediate area. However, other announcements such as the expansion of Adobe in downtown have sustained this initial spike that shows no signs of slowing.