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Peering into Alphabet's, Snap's, and Facebook's Future

PART:
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Part 9
Peering into Alphabet's, Snap's, and Facebook's Future PART 9 OF 12

A Look into Facebook’s Real Estate Venture

 

Easing Silicon Valley housing pains

Facebook (FB) is funneling an unknown amount of money into building a company town near its Menlo Park headquarters in San Francisco. The town, which Facebook has dubbed Willow Campus, will occupy a 56-acre parcel of land that the company acquired in 2015.

Willow Campus is expected to be up and running by 2021, if everything goes according to plan. Although Facebook has not made public how much it will spend to build the town, it has portrayed it as a solution to the housing crisis in Silicon Valley—US (SPY) tech housing units are in short supply, and apartment rent has skyrocketed in recent years.

A Look into Facebook&#8217;s Real Estate Venture

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Below market rates

Facebook’s Willow Campus will add 1,500 new housing units in San Francisco. The company plans to price 15% of the housing units below market rates, which is likely to see Facebook accommodate a more diverse population. The campus will accommodate not just Facebook employees, but anyone interested. Besides providing housing units, Facebook’s company town will also include space for offices, grocery stores, shopping centers, pharmacies, and other amenities.

Following in Alphabet’s footsteps

Facebook is not the only tech titan trying to ease housing pain in Silicon Valley. In June, The Wall Street Journal reported that Alphabet (GOOGL), the parent company of Google, had inked a deal for 300 apartment units for its employees. Alphabet’s housing plan could save employees up to $700 a month in rent.

Google, Facebook, and Silicon Valley rivals Twitter (TWTR) and Snap (SNAP) live off online advertising sales. Facebook’s balance sheet didn’t have any debt at the end of 2Q17, and the company’s cash balance was more than $4.4 billion at the end of the quarter. How the construction of the company town affects its financials remains to be seen.

 

 

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