The Google Effect: How the company's shuttle line affects San Francisco

[hariharan]

At a time when so many San Francisco neighborhoods are experiencing a certain sagging in the market — the inevitable aging of the eternal boom — it's interesting to note that a few places have proved themselves strangely resilient. Why some neighborhood markets remain lively while others go into hibernation or fall ill is a matter of constant deconstruction for real estate analysts. Whether they focus on supply vs. demand, industry hype vs. media horror stories, a revitalized shopping area or a new transit hub, it's often difficult to disentangle the myriad factors that influence the worth of a given neighborhood.

So when at a recent brunch I heard some Noe Valley residents discussing what was bolstering the value of their homes, I was particularly fascinated by a single factor they had all settled on: the proximity of the Google Shuttle stop. None of the group was employed by Google, but that didn't seem to matter. "I know some people are mad about the noise," one of them told me. "But we're not complaining."

Could it be that a few private bus lines would actually affect the real estate and residential rental markets of a big city like San Francisco? At first, it seemed like a bit of a stretch. I mean, how big could the phenomenon be? Google does not release specific data about routes, number of trips and passengers, but company spokesperson Sunny Gettinger told me the company shuttles 1,200 employees daily from around the Bay Area to its Mountain View campus.

Yet according to some real estate experts, the shuttle service exudes a powerful force field over the micro markets on its most popular routes like the Valencia Corridor, Dolores Heights and Noe Valley.

J.J. Panzer, a property manager with Real Management Company, based in Noe Valley, said that again and again he's gotten requests for rental apartments or homes near the 24th and Castro Street stop. "I always have fantastic, qualified tenants for any of our units near the shuttle stops," he told me. "I think it's really propping up the market."

Panzer characterizes his Google tenants as young professionals between 21 and 35 who have the money to buy homes but are renting at a high price because they are in no hurry to settle down or buy homes that aren't exactly what they want. "They're selective, but they will pay a premium for quality," he said.

One client he recalled told him he wanted to live within 100 yards of the stop. "We worked with him for three months, but never found something that fit his precise criteria," he told me.

Indeed, all the real estate agents who responded to my inquiries about the Google Shuttle effect offered anecdotes about Google employees who were looking for homes to buy within spitting distance of a shuttle stop.

"I'm working with a couple that is specifically looking for a home/condo near the Google line. They have made several offers but were outbid every single time," Zephyr Real Estate's Tanja Beck told me in typical response.

Michael Ackerman, also of Zephyr, recently helped a Google employee find his home sweet home after analyzing all the available properties near the city's shuttle stops. Noe Valley real estate agent Lamisse Droubi also has had numerous clients from Google who have put the shuttle on their must-have list.

Although Droubi wouldn't pin all of Noe Valley's famed real estate resilience on a handful of buses, she did confirm it was an important factor for some of her clients. In general she's noticed that the core of any given neighborhood (usually where the stops are) seem to be retaining their value more than the edges of those same desirable neighborhoods.

"Last week I had two properties open in Noe Valley and both had about 50 groups go through them, so there's still a lot of traffic," she said, adding that although there are no longer 12 offers per home, homes in her neighborhood rarely go below the asking price unless there's something wrong with them. She characterizes the current buyers (like Panzer's tenants) as "a lot more selective" and not terribly affected by the current mortgage morass.

What does the Google Shuttle effect teach us about waxing and wanings of real estate demand? That the eligible buyers may be changing — gradually reshaping the relationship between the suburbs and the city. "It's fascinating how things have changed," observed Panzer. "It used to be you got a job in the city and commuted to the suburbs with a yard. But Google really predicted the spirit of this generation. They want to live in the city and they don't want to drive their cars."

It also may herald a new era of transit related micro markets — not based on public transit lines but private ones. With Apple, Yahoo, eBay and VMware also starting employee shuttle services in the Bay Area (and Microsoft recently launching one in Seattle), there may soon be more transit-specific real estate formulations to measure. Perhaps it simply confirms a belief dear to urban planners: that in an era of high oil prices and global warming consciousness, good transit plus good jobs really does equal a strong housing market — even when all else in the economy seems to be going all higgledy-piggeldy.