Silicon Valley's Newest Address? Look East

Michael S. Malone, Contributor

6/05/2013 @ 3:49PM

It is just before 5 pm on a hazy Tuesday at the Diridon transit station in downtown San Jose.  The ACE commuter train hums and rumbles as it waits in its bay.  Overhead, men and women are making their way, not yet hurried, through the old WPA-built deco station lobby and down the long ramps, each stopping to punch their transit pass into a machine.

Some are in business suits, others in bicycle gear, but most are dressed in that formal-casual look of people who work in the hundreds of glass towers and office parks of Silicon Valley.  They have arrived by bus, the local light rail system, bikes, and some even in cars – and most are carrying shoulder bags or cases that betray laptops and iPads inside.  A few are still on their smartphones, continuing their work day.  They stream onto the train’s five cars, selecting the one that suits them best:  two for regular commuters, one with bicycle racks, and two at the front equipped with desk-like set-ups that offer lighting and wireless connections.

At almost 5pm on the dot, the doors on the cars close and the train makes its way out of the station.  It heads north, skirting out through the older districts of the city, then turns west through the cities of the East Bay.  Then, climbing into the brown hills, the train heads up through Niles Canyon, where Charlie Chaplin and Buster Keaton filmed in the original Hollywood.

The jaded commuters have seen all of this many times before, and before long they have pulled out their electronic tools and gone back to work.  It is an hour to Tracy, and though these distracted riders don’t look the part, they are in fact California’s latest generation of pioneers – and in their commute may lie the future of Silicon Valley.

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Over the last half-century, Silicon Valley has become legendary for its ability to overcome one technological obstacle after another, often against seemingly impossible odds.  But now the Valley’s very success has presented it with a geographical obstacle that won’t be overcome so quickly.

Electrons can circle the world on the Internet in a fraction of a second, but commuters trying to get to their jobs at Internet companies in the Valley aren’t so lucky.  One reason is that the combination of high wealth and a limited number of available homes has skyrocketed local real estate prices to among the highest in the nation.  The last under-one million dollar house in Palo Alto sold a decade ago.  Now comparably inflated prices can be found across the Valley, and not just in the hills, but on the Valley floor from Redwood City to San Jose.

Just as important is the topography of the Valley and the surrounding San Francisco Bay Area, which essentially sit in a seam between the Coastal and Diablo ranges of mountains.  Thirty years ago, when the Valley still contained the last orchards and farmland stretched to the south, this wasn’t a big concern.  But now the Valley is not only out of space, but so increasingly are its traditional safety valves in the South Valley and the East Bay.

So where does the Valley grow next?  The answer isn’t easy anymore.  North?  Unfortunately, the Peninsula gets narrower as one heads in that direction.  And then there’s the great roadblock of San Francisco itself:  expensive, and already the home of more than a thousand new start-up tech companies over the last decade.  And, beyond the bottleneck of the Golden Gate Bridge, lies even more expensive Marin County.

West?  Once you drive curvy and scary Highway 9, the only real road over the Coastal Range, you discover that Santa Cruz and the Pacific side is even narrower than the Bay.  South?  Southwest takes you over a long passage in the mountains to Monterey and Salinas.  Southeast?  Over the dangerous Pacheco pass, past the endless San Luis reservoir and out into the hot and unappealing Central Valley.  Either way, it is a two hour commute.

That leaves East.  But the East Bay cities are already full of tech companies and increasingly expensive homes.  Out of desperation to cut costs and find an affordable space, a growing number of companies have even begun to set up shop in crime-ridden Oakland.  Meanwhile, Berkeley is crowded and expensive.

That leaves the eastern hills of the Diablo range, presided over by might Mt. Diablo itself.  The first valley inland from the Bay, which contains Contra Costa County, has already had its Silicon Valley growth boom, fueled in large part by the dot.com bubble of the Nineties.  To sit in gridlock on the 680 Freeway at 7 a.m. and see ahead of you four lanes of cars heading south to the horizon and the Valley is to quickly understand why tech workers are now looking even farther out.

The pathway out to that new territory is the 580 freeway, which branches off 680 near Livermore and heads up and over windswept, windmill-dotted (and rock music notorious) Altamont pass, or the ACE train as it emerges from Niles Canyon, crosses the Contra Costa corridor then climbs those same hills through Patterson pass.  Both drop out of the burned-brown mountains into the town of Tracy.

This is San Joaquin County, long known as a major agricultural region in California’s great Central Valley.  Most Bay Area folks, if they’ve noticed the county at all, remember it only as part of the long stretch of farmland they had to drive across on their way to Tahoe and the Sierras.  Most recently, the county’s biggest city, Stockton gained national attention both for a rising crime rate and for political mismanagement – it became the largest city in the U.S. in recent memory to go bankrupt.  So great was the fall-out – jokes, editorials and international reporting – from that event that the Mayor, in a sad attempt at levity, showed up for his most recent State of the City address wearing an old-fashioned suit of armor.

The reality is that, after the reporters and news crews moved on, Stockton has pulled off a remarkable turnaround, reducing its crime rate and asserting a new financial discipline – to the point, writes the regional newspaper, The Record, that it has become “the poster child” for other U.S. cities trying to turn around their fortunes.  But it may be years before the scandal fades and anyone notices.

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But Tracy, San Joaquin’s closest city to Silicon