Google owner Alphabet Inc. is dipping its toe into the real estate industry in order to help its employees deal with escalating housing costs in Silicon Valley. The tech giant purchased 300 apartment units from a modular-home startup known as Factory OS. The apartment units are expected to serve as short-term housing for Google employees, The Wall Street Journal reports.
The cost of the deal is reported to be between $25 million and $30 million. With modular construction, factory-built homes are essentially pieced together on site. By going this route, Google hopes to reduce construction costs by somewhere between 20 percent and 50 percent. But the approval process for modular homes can sometimes be tricky, particularly in places like California and New York, WSJ reports.
“Anything that can help us to move forward with a greater knowledge of how we can produce housing more effectively is something we’re interested in,” says John Igoe, director of design and construction at Google. “We absolutely are confident that it will work. Hopefully, it doesn’t become false bravado.”
San Francisco rents have surged by nearly 50 percent since 2010. Home prices have increased 98 percent since the bottom of the market in 2009. Tech companies are increasingly trying to address the severe housing shortage in Silicon Valley on behalf of their employees. Facebook, for example, pledged to plan 1,500 units in Menlo Park; 15 percent of which are to be classified as affordable housing. Facebook officials are reportedly also considering modular housing.
“We’ve reached a tipping point where costs are just so high that people are desperate to figure out a solution,” Carol Galante, faculty director at the Terner Center for Housing Innovation, told WSJ.
Source: “Google Will Buy Modular Homes to Address Housing Crunch,” The Wall Street Journal (June 14, 2017)