Developer John A. Sobrato, 80, is the ninth largest landowner in Santa Clara County
A project developer who started building single-family homes in the 1960s is now one of the top ten owners of real estate in Silicon Valley, according to a new report.
Developer John A. Sobrato, 80, is the ninth largest landowner in Santa Clara County and his Sobrato organization owns $ 2.51 billion of taxable real estate, according to a joint report from the Center for investigative journalism.
At the top of the list of land barons in Silicon Valley is Stanford University, followed by Apple and Google. Other project developers as well as Cisco and Intel complete the top ten.
In a broad interview with CIR, Sobrato spoke about his humble beginnings in the industry, as well as his vision of why housing costs in Silicon Valley have increased, and what can be done about it.
Stanford University (above) is by far the largest landowner in Silicon Valley, with a huge campus and taxable real estate worth $ 19.75 billion
Tract housing is seen around San Jose, California around 1963. A single-family home costs on average about $ 145,000 in dollars today
The new report reveals that the 10 largest owners in Silicon Valley manage more than 11 percent of all taxable assets in Santa Clara County – a total of approximately $ 59.2 billion in taxable assets.
10 largest landowners in Silicon Valley
- Stanford: $ 19.75 billion
- Apple: $ 8.97 billion
- Google: $ 7.5 billion
- Irvine Company: $ 5.93 billion
- Jay Paul: $ 3.48 billion
- Cisco systems: $ 3.35 billion
- Essex Property: $ 3.09 billion
- Intel: $ 2.52 billion
- Sobrato organization: $ 2.51 billion
- Prometheus: $ 2.05 billion
Sobrato started with single-family homes in the area in 1960, before diversifying into commercial development and several multi-family homes.
& # 39; For the first 13 years of my career, I was a real estate agent, single-family home in Palo Alto, (with a) company called Midtown Realty that I started in 1960 & # 39 ;, Sobrato told CIR.
& # 39; We used to sell houses for $ 20,000, 10 percent less. It was easy for people to buy a house, very easy. And no one had to commute for two hours to, you know, Tracy, a distant suburb of San Francisco Bay, he said.
Palo Alto only got its first condominium in 1963 – and the Sobrato company had the offer for it.
Sobrato founded the Sobrato organization in 1979 and the company grew with more than 110 commercial buildings and more than 30 apartment complexes
As a developer, Sobrato made great profits by building Apple's old Infinite Loop headquarters in Cupertino in 1993.
Apple's new campus, Apple Park aka & # 39; The Spaceship & # 39 ;, was shown in an aerial photo last month. Apple is the second largest landowner in Silicon Valley with a value of $ 8.97 billion
Sobrato and his son, who took over the management of the company in 1998, both moved away from day-to-day management in 2013 to focus on charity activities.
While Silicon Valley has taken a huge flight, the value of real estate in the area has exploded, making homes increasingly unaffordable.
In 1960, a home in Santa Clara County cost about $ 145,000 in $ 2018, about 2.3 times the median annual income for a household in the region, according to CIR.
By 2000, those costs had risen to $ 651,000 and six times the average family income.
In 2018, a house in the valley cost an average of $ 1.1 million, or 8.8 times the average family income that year.
Over the same period, the average rent in the province increased from $ 797 in 1960 in 2018 dollars to $ 2,305 last year, according to Census data.
Sobrato says that the trend will continue, because land is too scarce and demand is too high.
& # 39; It always becomes a very expensive place to live, & # 39; said Sobrato. & # 39; We will not be able to lower the house price to where it is affordable for most middle-income people. & # 39;
The Google campus in search of their new construction, left, rear, and Shoreline Amphitheater, rear right, can be seen in Mountain View last month
Google is the third largest landowner with a value of $ 7.5 billion. New construction can be seen on Google's Mountain View campus last month
Sobrato said that construction for additional homes was recently delayed due to a slowdown in rental growth that achieved the expected profit from construction.
& # 39; This year we do not see the major increases we have made in the past, & # 39; he said. & # 39; So many projects can start that get stuck on the side of the apartment. & # 39;
He said other factors played a role in the lack of new construction to meet demand, including increased construction costs – building offices cost $ 8 per square foot in 1960 compared to $ 400, he said – and the requirements of the California Environmental Quality Act, known as CEQA.
Sobrato said that city authorities are also resisting new housing, affordable or otherwise, for fear of the changes that would come with increased density.
Stanford, the county's largest real estate owner, recently encountered this roadblock and withdrew an ambitious campus expansion plan last week following a collision with the Santa Clara County Board of Supervisors.
The permit that Stanford was looking for would have enabled the school to build more than 2,275 million square meters of academic space and 2,600 student beds between now and 2035.
Negotiations on the permit allegedly diverged over the & # 39; development agreement & # 39 ;, a contract that would have guaranteed Stanford's development rights in exchange for a list of public benefits.
To reduce housing costs in Silicon Valley, Sobrato suggested building houses for teachers and church workers on existing government land as a way to tackle at least part of the affordability crisis.
& # 39; These schools have lots of greenery, soccer fields, soccer fields, you name it, and some of these areas can be redeveloped into dense homes, & # 39; he said. & # 39; But if the school district decides to do that, the neighbors usually resist. & # 39;
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