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January 27, 2015

San Mateo Rides Tech Boom But Keeps Small Town Feel

By Rachael Myrow

San Mateo has long been a bedroom community for tech hubs to the north and south. But in recent years, it’s built a niche for itself as a home to tech startups such as GoPro and Solar City, among hundreds of others.

Unlike in other cities, such as San Francisco or Redwood City, the boom hasn’t altered the character of San Mateo all that much, says Rafat Haddad, who owns 3 Bees Coffee downtown. “It has the feeling of a small town,” he says, “but it’s a big downtown.”

Haddad used to be on the board of the Downtown San Mateo Association, and his coffee house functions as a social hub for many of the town’s movers and shakers. YouTube began in San Mateo, and its founders (PayPal alums Chad Hurley, Steve Chen and Jawed Karim) used to hang out at 3 Bees. Haddad remembers when there were just the three founders, then 60 employees, then 100. Then Google snapped them up.

“You know,” he muses, “you’d never know that they were gonna make it. Some of them, they do, and some of them, they don’t.”

Small Spaces Attract Tech Startups

San Mateo doesn’t have the massive commercial footprints that are driving tech development in other cities, such as San Francisco and Redwood City. The downtown is chockablock with older buildings that date as far back as 1893. They’re charming, and still functional, but they’re also “very, very small,” says Marcus Clarke, laughing. Clarke is San Mateo’s economic development manager.

“Who can fit in those?” he says. “They used to be key shops and those kind of things. And now, a lot of boba tea shops can fit. They’re the only ones who can fit in 300 square feet!”

The commercial spaces upstairs from boba tea shops and other small businesses turn out to be just the right size for tech startups. “If they get big,” Haddad says, “they move on to another big space. So they keep the opportunity for others to come again.”

Haddad says it was about five years ago when tech companies starting flooding into downtown. In 2013, 144 tech companies applied for new business licenses in San Mateo. Last year, 151 applied.

Not that everything’s small. Venture capitalist Tim Draper spotted an existing large building, the landmark Benjamin Franklin Hotel, and retrofitted it to become Draper University, a school for would-be tech entrepreneurs.

“Tech is incorporating into the historic structures downtown,” Clarke says, “which is really fascinating.”

Steering Clear of Corporate Silos

San Mateo’s tech boom is nowhere near as big as San Francisco’s. The California Employment Development Department reports San Francisco added more than 18,000 jobs last year in tech. San Mateo added 2,000. Still, that puts San Mateo ahead of most cities in the Bay Area.

“We’re going through some changes right now because everything changes,” says Rick Bonilla, a San Mateo planning commissioner and former union organizer who’s running for a vacant seat on the City Council.

Bonilla’s big on that favorite phrase of urban planners: “smart” growth. Among other things, that means putting jobs near transit.

“We’re seeing some higher heights and some larger developments,” he says, “but we’ve been smart in planning for this to happen along our transit corridor. So all this work is centered around our three train stations on the Caltrain line.”

That means people can leave their cars behind, and the hope is they’d be more inclined to step out and engage with the city. San Mateo has some of those self-contained corporate campuses, silos that provide no reason for employees to leave. But Bonilla says city planners prefer buildings that contribute to the life of the community.

In the early 20th century, Japanese immigrants came to San Mateo to work in the salt ponds and the flower industry. Today, Japanese-Americans make up only 2.2 percent of San Mateo’s population, but they’re still a major cultural influence and a draw for the rest of the region. In the downtown area alone, there are roughly 30 Japanese restaurants.

The line forms early outside Ramen Dojo at lunchtime. That’s because if you show up when the place opens at 11:30 a.m., you could be in for an hour-and-a-half wait. On one recent day, the people in line came from Fremont, Mountain View, New York City and Jakarta, Indonesia. The locals were mostly tech workers from Gilead Sciences, Genentech, Oracle, Zinga and GoPro.

As they waited across the street from — what else? — a construction site, I asked why it doesn’t seem like San Mateo sees the kind of tech-boom blowback you see in San Francisco.

“I think San Francisco, because it’s such a dense city – in that there’s a finite amount of space – basically, when they develop, it raises rent prices across the board,” says Danny Gold, who commutes from San Francisco for his job at GoPro. “People who have been living there a long time kind of get edged out. San Mateo, because it’s a little bit bigger, I don’t think the effects are as pronounced.”

Limits to What San Mateo Can Do

But people on the Peninsula are getting edged out of the housing market, too. Marcus Clarke worries that an increasing number of people working here can’t afford to live here.

“A lot of our workforce lives in Hayward and even farther out,” he says. “They have to leave at 6 in the morning just to make it here by 8. You wonder about the quality of life for that. What kind of region does Silicon Valley want to be and who is it for?”

If San Mateo wanted to meet the demand, it would need to build 3,100 units over the next eight years, according to the Association of Bay Area Governments. At Bay Meadows, the biggest new development in San Mateo, 1,100 housing units are going up, along with commercial space, 18 acres of parks and a private high school.

But these condos are not options for the commuters Clarke worries about. Two-bedroom units here are going for $900,000. Ultimately, housing, like traffic, is dependent on regional and international economic pressures far beyond the control of the city of San Mateo.

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