As the big tech companies -- Facebook (NASDAQ: FB), Google, Amazon, Apple, and Microsoft -- are coming closer and closer to ruling the world (big tech revenues are bigger than some economies, such as Belgium, Ireland, and Hungary), their portfolios wouldn't be complete unless they also become owners of mass amounts of real estate. And that's exactly what's happening.
Google, for example, bought 80 acres of land in San Jose, California, and is calling its planned project, meant for employees of Google, or Googlers, "Downtown West." If everything goes according to plan, Google employees would work for and pay rent to Google. Facebook, not to be outdone, is doing something similar.
The Facebook company town
Facebook is building Willow Village, a 59-acre site, near its headquarters in Menlo Park, California. It will have 1,729 apartments and lots of amenities to keep residents, most of whom will be employees, close by, including:
- 200,000 square feet of retail shops.
- A supermarket.
- Bike lanes.
- Green spaces.
- An elevated park.
- A 1.25 million-square-foot office building to be branded as a "collaborative area."
- A hotel for when friends, family, and of course, corporate guests come to visit.
Willow Village will be so nice, employees won't ever want to leave. And that's sort of the point. Although this Facebook project was met with resistance by area residents for two years, Facebook still got its way, albeit with some compromises, such as less office space, more apartments (320 apartments will be affordable, and 120 will be for seniors), and work must first start on amenities that nonemployees can enjoy as well, like the grocery store.
The implications of working for your landlord
In a mom-and-pop landlord-tenant situation, it's usually not recommended to turn a tenant into an employee. There's just too much room for disputes and complications.
When Facebook's and Google's massive real estate developments take hold, a question remains as to whether working for your landlord is a good policy. Since Willow Village and Downtown West are not here yet, we can only speculate.
These developments could turn out to be the utopia they're portrayed as being, giving workers a good work-life balance, since they can live near work in a vibrant, beautiful setting.
But there could also be a dismal outcome: This arrangement could turn workers into sort of modern-day indentured servants, especially if this live-work arrangement is combined with a noncompete clause, which prohibits employees from working for a competitor after leaving their current job. Decades ago, noncompetes were strictly for CEOs and the like, but now they're so commonplace they're used at many companies for every run-of-the-mill worker.
It generally becomes more difficult to leave an employer if you also rent from them. If you leave under bad circumstances, renting might become awkward at best. If Facebook employees who live in Willow Village sign a noncompete clause, it will be even more difficult for those workers to leave Facebook, giving Facebook a lot of power over their lives.
Are the tech companies becoming too powerful?
A congressional investigation found Facebook, Google, Amazon, and Apple hold too much power in the marketplace -- the likes of monopoly power. The investigation also found these companies have abused their power.
So what will happen when these companies own what amounts to a city designed to entice employees to become tenants as well? Will these companies exploit their workers? Looking at Facebook's business practices thus far, namely eliminating rivals by buying them, it could be a possibility.
The Millionacres bottom line
As Facebook becomes richer, more powerful, and now a real estate company, soon to be both employer and landlord to the same set of people, there's not much to stop it from calling the shots in society.
Commercial real estate investors might be interested to learn of the new and exciting real estate developments by Facebook and the like, but investors might want to look further than the shiny package and consider where this development of tech companies becoming real estate companies is going. Maybe it's time for a new slogan. Besides "drink responsibly," how about "invest responsibly"?