California's Bay Area has grappled with homelessness for years. And the hope is that as big companies make plans to build new campuses, the crisis will start to abate. Google, for example, is investing billions of dollars into developing a new San Jose campus. And Apple (NASDAQ: AAPL), too, has a plot of land in North San Jose designated for a new office complex.
The problem, however, is that Apple's land has been taken over by people without a roof over their heads. And now, the tech giant has a major issue to solve -- how to forge forward with its development plans without leaving a group of vulnerable people in the lurch.
A tough spot for Apple
Two years ago, Apple bought a large plot of mixed-use land designed to house its new campus as well as include room for affordable housing. The company pledged $2.5 billion to help combat the Bay Area's affordable housing and homelessness crisis. But so far, not much has been done to actually address the issue at hand.
Meanwhile, Apple is only now gearing up for construction activity to begin on the land it procured as part of its 2019 pledge. And in the interim, that land has become a hub for the homeless.
Such is the danger when lots sit vacant for too long, and so the current problem isn't unique to Apple. Rather, the issue is one real estate investors should be aware of when embarking on any construction project.
But now, Apple has a real conundrum on its hands. It wants to break ground on its new office campus, but it also doesn't want to displace dozens of people who clearly have no place else to go. Furthermore, some of the people who have taken up residence on Apple's property may not go quietly.
Apple says it's in talks with the city on a solution to the problem at hand. But right now, the company has an immediate problem it needs to address.
Of course, Apple has directly pledged to help build affordable housing in San Jose. And it's not the only company that's been willing to allocate money to that particular problem. Other tech giants like Facebook and Google have also pledged large sums of money to combat the Bay Area's housing shortage. In fact, Apple's financial commitment of $2.5 billion is the largest at hand (Facebook and Google committed $1 billion each). But now, Apple needs to work with the city to figure out where housing can go within the land it's acquired.
At the time when Apple acquired its land, new housing wasn't allowed in that part of the city. While that's an issue the city may be more than willing to work around, there are logistics to be addressed that won't be resolved overnight. And that puts Apple -- and the dozens of people who risk losing the temporary homes they've set up for themselves -- in a very bad spot.
It also speaks to the problem of acquiring land and not immediately breaking ground on construction. Right now, many projects are on hold due to materials shortages. But the longer lots sit vacant, the greater the chances of them being occupied by desperate people who don't have any place else to go.