The Country Rose Bed and Breakfast Inn in San Martin, Calif., offers more than a weekend getaway with home-cooked meals, a piano parlor and big magnolia trees to shade the home.
It offers one answer to Silicon Valley’s latest housing crunch — the lack of short-term housing for the region’s steady influx of workers.
Gone are the days of hiring someone, then simply calling a relocation service to reserve a temporary one-bedroom apartment for the employee.
Apartments, condos and townhouses — even bedrooms for rent — are hard to come by in this crazed rental market.
That means companies bringing new people into the region are being forced to be more creative, digger deeper into their pockets and looking in Silicon Valley’s outskirts in search of short-term housing.
And that equals good business for folks like Rose Hernandez, who runs the Country Rose B&B, and extended-stay hotels such as Marriott’s Residence Inns and Extended Stay America Inc., which is building three specialty hotels in San Jose.
“I can’t recall, since I came out here in 1980, seeing such a high demand for housing,” said Paul Kline, co-owner of K&M Relocation in Campbell, Calif. “It’s ridiculous.”
Kline is the third-party agent for many of Silicon Valley’s largest companies. They call him when a new engineer or software designer or vice president is gearing up for a move into the area. Kline’s job is to make sure those folks have a place to live when they arrive.
To do that, he’s built business relationships with people like Melissa Sifuentes, a leasing consultant at the Willow Lake Condominium complex in north San Jose.
Willow Lake, like many complexes, reserves about 10 percent of its units for corporate housing and relocation clients. But like most other complexes, Willow Lake has no vacancies and likely won’t until late summer or early fall.
“The market is really tight right now,” Sifuentes said. “The number of people coming in (for relocation) is pretty rapid and we don’t even get calls anymore because they know we’re booked.”
For years, the corporate housing business has been steady in Silicon Valley. But supply and demand has turned it topsy-turvy in the last few months, partially because the demand for permanent housing has become so intense.
Kline said people are going beyond the usual 30 days in corporate housing, mostly because it’s hard to get into a permanent place that fast.
“They go into corporate housing and want to buy a house, but there’s no available inventory,” Kline said. “They can’t get in anywhere else within a reasonable amount of time.”
They need 45 or 60 days to find a place of their own. They also need the extra time to come up with the thousands of dollars in move-in costs or tens of thousands for a down payment it takes to get into a place.
“It’s extraordinarily expensive to get out of corporate housing and find something else,” Kline said. “A lot of people who can afford the payments are short the capital to get in. It’s supply and demand. It’s what drives everything in our economy. But in this valley, it’s worse that anyplace else.”
So when corporate housing runs out or when it’s not available, folks turn to the by-the-night alternatives.
They’re calling the Residence Inn and Extended StayAmerica hotels, and even places like the Country Rose B&B. They’re paying between $3,800 and $5,300 a month, a sizable increase over the $3,300 that Willow Lakes charges for a fully furnished one-bedroom unit with paid utilities, cable TV, water, trash and maid services.
A room at the Residence Inn is pricier, but Eric Washburn, night manager at the Fremont, Calif., location near Interstate Highway 880, said the hotel’s amenities could make it more like home than a lonely apartment.
“We feed them dinner, we cook them breakfast, we clean their room. What’s better than that?” Washburn asked.
The rooms, which range from a studio priced at $3,870 a month to a two-bedroom loft at $4,470, come with kitchens and living room areas, as well as meals in the dining room, he said.
Converting a hotel room into a mini-apartment is a market that’s fast taking off in Silicon Valley.
Extended Stay America Inc. has been building apartment-like hotel rooms for years, often near hospitals where families can stay while their loved ones receive long-term medical treatment.
Recently, and especially in the Bay Area, those types of hotels have been popping up near tech business parks.
The chain is building three hotels in San Jose.
“They’re like studio apartments geared toward the long-term business traveler,” said Monique Damiano, spokeswoman for the company, based in Ft. Lauderdale, Fla.
“We get regular nightly guests but our amenities are set up for people who need a home away from home. If you’re having that kind of problem in your area, these hotels will do very well.”
The construction will bring an additional 319 rooms to Silicon Valley before the end of the year, priced between $1,400 and $2,000 a month, Damiano said.
And while they’ll have the basics — bed, TV and kitchenette — they won’t have the ambience of a place such as the Country Rose B&B.
For John Mavor, a Utah engineer who often spends weeks or months working at his company’s San Jose office, knowing that he would come home to a place like the Country Rose made the tough commute from the Gilroy area into Silicon Valley that much easier.
“I get a good meal and I know Rose (Hernandez) pretty well,” Mavor said. “It’s like a stay with my mother or grandmother.”
John Hemingway, chief financial officer of Alien Technology, a Morgan Hill start-up company, also stayed at the Country Rose. He agreed that it was more comfortable than an expensive hotel and cheaper — $179 per night compared to $199 or more elsewhere.
In Seattle, Hemingway’s company rents a few apartments and keeps them on-hand for new employees or company guests.
“It’s cost-effective there,” he said. “In Seattle, you can rent a two-bedroom apartment for about $800. But here, they don’t exist and when they do, they’re more like $2,000. You’ve really got to get good utilization for something like that to fly.”
Still, the issue of corporate housing in Silicon Valley can’t be ignored, Hemingway said.
“It’s something we’ve got to figure out how to address,” he said. “We’ve been toying with the idea of buying a couple of apartments. But it’s ridiculous for start-ups to have to make that kind of investment.”
It’s a price to pay, but is it worth it to be located in this area when housing becomes an issue for employees starting at day one?
Rodney Hexter, director of operations at Ericsson’s Menlo Park office, said housing headaches come with the territory if you want to be in Silicon Valley.
“It’s generally considered by us to be a cost-of-doing-business issue,” he said. “It does become a discussible topic but when the time comes to consider the location of the company, it’s very important for us to remain part of the environment of the valley. We feed off the energy of the valley.”
The same is true for many of Silicon Valley’s companies, big or small, old or new.
Jim Messemer, president and chief executive officer of Hopelink, an Internet company based in Menlo Park, Calif., knows that costs are higher nearby. But recruiting the best talent for his company and being located in the tech center offset the headaches.
“I can’t imagine that any company in the San Francisco Bay Area hasn’t sat down and strategically looked at how to deal with this issue,” Messemer said.
“We have to weigh out all of the options in providing individuals who can deliver what we need to complete our business model.
“With that being said, it all comes back to getting the right individual and the right talents.”
