Category Archives: East Palo Alto

A Tale of two Palo Altos

BNB’s are a popular choice in the San Francisco Bay Area and Palo Alto is not exception. With the rise of locally headquartered companies like Apple, Facebook and Google, and other companies small and large attracting thousands into the local work force they provide a regular stream of professional transients from around the nation and internationally who perform their business in synergy with the local economy.

 

Facebook is particularly interesting because despite the prestige of being associated with the City od Menlo Park, which is one step north of the ubiquitous “Palo Alto”, Facebook headquarters is actually adjacent to one of the lowest income-per-capita residential areas on the San Francisco peninsula (though not particularly low on a national scale). The City is East Palo Alto is part of San Mateo County, unlike the internationally-known City of Palo Alto which is the northern most city in Santa Clara County. Only a highway, for the most part, separates the two cities of common name.

Stanford University looking towards Palo Alto from Hoover Tower. Photo by Challen

 

Santa Clara County also includes Silicon Valley cities like Mountain View (Google), Sunnyvale (Lockheed Martin), Cupertino (Apple), Santa Clara (Intel), Palo Alto (Stanford University and Hospital, Hewlett Packard, Tesla), Los Gatos (Netflix), the behemoth city of San Jose (Cisco) and other smaller and often more affluent communities stretching into the beautiful foothills of the San Francisco peninsula.

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A Google map of the Bay Area

 

To give you just a bit of the contrast between Palo Alto and East Palo Alto, in 1990-92 East Palo Alto earned the dubious distinction of being the “murder capital” of the United States.

 

Criminal and illicit drug dealing activities were so rampant in this decades-old lower socio-economic area, residents and commuters were frightened to drive down main thoroughfares for fear of being car-jacked by brazen criminals. Moreover, the homicide rate was so intimidating (in 1992, there were 42 homicides) it made my law enforcement friends who worked in Compton, CA balk at the prospects of having to jump into the fray.

 

Fortunately for the community, the state and local law enforcement agencies did step in and with sweeping campaigns putting the area on the right track removing entrenched drug crime elements. Nearly 20 years later and steady progress has made the East Palo Alto a much safer place to live and to work, the future prospects continue to look bright.

Image source: Peeryfoundarion.org showing the boundary of East Palo Alto in relation to two corporate giants.

 

 

The potential of the area of East Palo Alto is probably best evidenced by Facebook’s Menlo Park move (2011) and breakaway expansion plans which paralleled more major anti-drug actions in East Palo Alto bringing even more substantial changes to the peace of the community in the last few years.

 

While the recent high-flying developments in the real estate market are widespread in the San Francisco Bay Area, including East Palo Alto, the area still has a deep community of lower income residents and home owners who are proud and happy to be established there. Progress continues to be made to improve living conditions and it attracts more companies like Amazon, a recent addition to the business landscape of East Palo Alto in addition to investor-philanthropists like the Zuckerbergs and Laurene Powell Jobs, both residents of Palo Alto.

 

A sharp contrast still exists, however, as highlighted in a recent article, a particular zip code in Palo Alto has registered the most expensive average real estate prices in the country.

 

From a financial investor standpoint, rental rates per home value ratios are often more favorable in East Palo Alto, where properties can still be found for under $1M, when compared to Palo Alto despite Palo Alto’s safer, quieter, established neighborhoods and highly-regarded schools. For example, a 3 bedroom 1 bath home in East Palo Alto, valued at about $1M may rent for about $4000 per month where as a similar Palo Alto home (humble based on trends in home building) may only rent for $6500 per/month but cost $2.5M.

Downtown Palo Alto on a Winter day. Photo by Challen

 

Although this previous example of rental rates is only an single snapshot (rents can be substantially varied and higher in both cities, especially in Palo Alto, given more valuable properties) the demand for rentals remains strong. This could be reinforced by the fact many professionals are assuming not to buy properties (in the Bay Area) but rather opting to rent or lease believing their long term plans will take them out of the area (where property is less expensive among other reasons) or that their investments are better situated outside of the real estate market.

 

What makes BNB popular, nevertheless, is not so much related to the real estate values, it is better linked to the professional transients in the area with the proliferation of business activity, Stanford University, Stanford Hospital and the others variety of needs for temporary accommodations in this hub of Silicon Valley where a home is preferred.

 

 

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CKY