Honest question... is that really true? It reads like hyperbole or certainly an over simplification.
So if they want to hire another, say, 5k engineers, they either have to somehow convince 5k people to move to the Bay Area or expand in satellite offices. Word on the street from local recruiters is that you can still get new grads to move to the Bay Area (for a few years at least), but it has become nearly impossible to get senior talent to move in because of cost of living and quality of life issues. So depending on the type of engineer they're looking for, yes, they may be effectively forced to expand in other locations.
They are very likely to be very good and very unlikely to be bad. But they are not gods walking amongst us. There are hundreds if not thousands of professionals in the Bay Area who have the talent FB is looking for AND are working at nearby, lower-paying companies. Facebook pays higher than Amazon, Uber, and all kinds of "sexy startups". So I can't buy the scarcity of talent excuse.
1. Housing prices will continue to increase since the supply is not changing yet demand (and ability to pay at current prices) is increasing
2.1 Gentrification happens and existing bay area natives get more adversarial to tech companies
2.2 Existing employees experience a decrease in QOL if comp packages remain the same
3. Tech companies keep having to increase TC packages to keep their employees' abilities to purchase homes
Also by expanding into other large markets tech companies can hire people who have lots of ties to an area and don't want to move. This has an added benefit of perhaps not having to offer as much TC since these markets might be less competitive.
In SV and SF, half the paycheck goes to the GOv and the other half goes to real estate.
If you want to cut labor costs, Simply find a city with a lower cost of labor. There's plenty to choose from: Austin, Dallas, Houston, Chicago, etc. All of these places sport roughly 100K salaries for senior devs. They could hire all the engineers they wanted.
And of course, there's always the final (least palatable) option: Improve your highering process. It's pretty ridiculous when half the employees of your own company wouldn't hire the other half.
A dev who bought a home eight years ago has a substantially different net income after housing and taxes from a similar dev who would be moving to the area.
So there's some merit to the idea that SV/SF have a fixed number of developers for whom salaries in the $150k-250k range are excellent, and another pool of "new arrivals" for whom that salary is decent/good, but results in a substantially lower quality of life. Further raising salaries distorts the real estate market even more.
Since SV/SF/California seems uninterested in the political moves necessary to improve the housing supply (sensibly, as these market changes would negatively impact the voters who have bought into the current system) the natural result is to move to other geographic markets for talent.
I would assume that the best real estate speculation would be to buy land with higher margins.
https://www.newyorker.com/magazine/2002/07/22/the-talent-myt...
Labor costs are high and growing in the SF Bay Area but there are many other areas that would work just fine for a tech company HQ.
I get that some people want their own borough's identity, but LIC doesn't really represent that.
"Many of these companies are willing to spend big dollars renting high-end Manhattan real estate, rather than the older office stock in Queens that Amazon was prepared to lease."
If anything it’s a poor place to put jobs, because unless you live in Queens itself the transport links are extremely poor.
The whole point was to show what the movers and shakers actually think of Middle America and every culturally irrelevant place on this continent. It succeeded.
Were any of those places whoring for yield ever in the running?
No.
For example, public transit. Only a handful of US cities have decent public transit at all, probably the only cheap city in that group is Philly. You're not gonna find good transit in Cleveland or Phoenix or Nashville, because they've chosen not to seriously invest in it. Is that Amazon's fault somehow?
I tend to agree that what Amazon did was pretty cheap and low class, though.
In other words, development in Queens/LIC isn’t attractive and needed government subsidies to make Amazon consider going there.
In general it seems like tech companies are willing to pay top dollar for locations in the most expensive areas like SF and manhattan rather than try to find cheaper areas.
