The job listings tell the story.
A search for openings at Applied Materials and Intuitive Surgical’s headquarters yields a combined 263 results— the kind of roles that are increasingly hard to get.
In Sunnyvale, the two neighboring companies, one in the semiconductor business and the other in medical robotics, have steadily grown alongside each other for two decades, paying cash for dozens of office buildings with an eye toward assembling their own campuses. Together, these separate plans would span a total of more than 4 million square feet.
Opportunities seem to be abundant in this suburban flatland, the second-largest city in the region known to the wider world as “Silicon Valley.” Nestled between Palo Alto and San Jose, with a population of around 160,000, Sunnyvale matured from farmland to a defense industry town before it became synonymous with computer chip production. Now it has evolved into a burgeoning outpost for Big Tech’s South Bay workforce and R&D divisions. As a result, the city can’t grow fast enough.
Two miles west of Applied Materials and Intuitive Surgical’s enclaves, a new community has sprouted around one of Sunnyvale’s two Caltrain stations. A 500-unit apartment complex — the largest housing development in the city’s history — is nearly fully leased after opening 14 months ago. Next to it, developer Hunter Properties just built two office buildings, totaling 600,000 square feet, that will be fully occupied by the likes of Databricks and Crowdstrike next year, once tenant improvements are complete.
Whereas builders in San Francisco are rationalizing why they can’t get housing off the ground or are pitching plans for office buildings with 15-year timelines, Sunnyvale developers have a much simpler axiom: We have built it, and they have come.
“Sunnyvale benefitted because it was able to deliver the biggest blocks of new spaces in a downtown environment,” said office broker Mark Christierson of CBRE.
The city’s office stock has more than doubled in a decade, from roughly 8.8 million square feet at the end of 2014 to 22 million today, making it Silicon Valley’s largest market outside of San Jose. Up the Caltrain corridor, available land in other tech havens, like Mountain View/Los Altos and Palo Alto, are half the size and mostly built out.
Hunter Properties and its development partner Sares Regis Group will have the ability to keep adding to Cityline, their downtown Sunnyvale collection, with two more blocks entitled for new office and residential units. And unlike developers laboring to get stuff built in San Francisco, these builders claim stable financing and reliable tenant demand.
“Once all the product is leased, we will build more,” said Curtis Leigh, principal at Hunter Properties.
‘Sunnyvale was the last stop’
The future wasn’t always this bright in Sunnyvale. Previous developers of the Cityline site — once home to a failed mall — lost the project during the Great Recession, leaving it undeveloped for a decade. In 2015, recognizing the momentum of the tech boom, J.P. Morgan took an equity stake in Hunter Properties and Sares Regis to acquire the land and finance its development.
“There was no way we could have accomplished this with a conventional construction loan,” Leigh said. Making the bank an ownership partner rather than simply a lender removed the risk of default or foreclosure, granting the developers more time to secure the right tenants.
As the land beneath Cityline was getting excavated, San Francisco billionaire Jay Paul capitalized on the momentum and opened two office campuses north of the then-nonexistant downtown, leasing them to the likes of Google, Microsoft, Amazon, NetApp, and LinkedIn.
“Sunnyvale was the last stop for brand-new construction,” Christierson said. “Those new projects are the ones that tend to lease first when [the office market] rebounds.”
But the reasons Sunnyvale is an outlier in what has largely been a struggling market for office buildings are more than economic. Assemblymember Patrick Ahrens — whose district spans Sunnyvale, Santa Clara, Cupertino, and parts of San Jose — said the development boom was made possible by an efficient and well-run city bureaucracy.
“They have the sort of governance that we can all aspire toward,” Ahrens said. “Look who they’ve attracted to come into town.”
Even though serving on Sunnyvale City Council is still a part-time gig, public officials have historically gotten along well and created a hospitable environment for businesses to interact with, Ahrens said. Furthermore, institutional knowledge regarding land use has remained in place for decades, giving developers certainty that their long-term plans won’t change.
Still, the tech boom hasn’t come without a price. “I still can’t afford to buy a single-family home in the place I was born and raised,” said Ahrens, 36, a Sunnyvale native who is one of only a handful of renters in the state Legislature.
The assemblymember said the No. 1 issue for companies in his district is housing affordability. Like other Bay Area cities, Sunnyvale has managed to create thousands of new jobs in a short period of time but not enough housing to support them.
Sunnyvale ranks fifth in the Bay Area in terms of median rent, behind Palo Alto, Foster City, Mountain View, and San Francisco. According to Zumper, the median price for a one-bedroom apartment is $3,040.
While the city met its state-mandated housing targets last decade by permitting 111% of the 6,000 units required, it’s struggling to match the target of 12,000 units for the current eight-year cycle. Per the city’s latest annual housing progress report, Sunnyvale had permitted only about 7% of its housing goal by the start of this year.
“We need to be delivering housing on all income levels,” Ahrens said. “If tech workers with generous salaries are still struggling, then the issue has gotten out of control.”
Anticipating the pent-up demand, residential developers have been trying to pursue projects in Sunnyvale for decades, said Dan Deibel, president of San Francisco developer Olympic Residential Group. Last year, he opened Hartwood, a 412-unit apartment complex adjacent to the Lawrence Caltrain station.
The project was the culmination of a decade of work, which started when Deibel served on the community group that helped formulate the neighborhood’s master plan. In 2017, his firm reached an agreement with the family that owned the 17-acre property to transform the land from its industrial use to dense housing.
After a 20-month pause at the beginning of the pandemic, the group broke ground in 2022. Deibel said the ownership group expects Hartwood to be fully leased by October.
“We intend to hold onto this project for a long time,” he said. Currently, the cheapest unit in the complex, a 536-square-foot studio, is going for $3,490. “The market sets the rent,” he said.
Despite the wins in new development, real estate in Sunnyvale is not immune to the dynamics of the post-pandemic world. According to CBRE, more than 16% of the city’s office space is vacant, meaning there is 3.6 million square feet of empty space scattered around town.
“It’s a tale of two worlds,” Christierson said. “If you’re best in class near the downtown core, you’re seeing the best deals. But if you’re on the outskirts, nowhere near transit, it’s going to be tough.”
Of those vacancies, even the campus Jay Paul developed specifically for Google hit a rough patch when the tech giant vacated multiple buildings last year in a broader pullback of office space.
But they didn’t sit empty for long. Walmart this summer agreed to lease one of the buildings — a 300,000-square-feet property — for itself.