Google and Apple announced in spring 2021 that they would be launching hubs in The Triangle. Now, the Durham community is preparing to grapple with the impact of these huge investments.
Google announced in March that it had chosen Durham to be the site of a new cloud engineering hub that’s expected to be one of Google’s premier engineering hubs and could bring 1,000 jobs to downtown Durham in the coming years. In April, Apple revealed a plan for a $1 billion, one-million-square-foot campus in the Research Triangle Park that could bring over 3,000 jobs to the area in the next decade.
The expansions will provide a boost to the Triangle’s economy by bringing these jobs to the area, including for Duke students—but it could also stymie the success of tech startups, increase congestion and accentuate Durham’s lack of affordable housing.
A boost to the economy
“[Google and Apple] will definitely affect the economy of the Triangle,” said Connel Fullenkamp, professor of the practice of economics. “They're large enough employers that they will give an even bigger boost to the things that have been happening here.”
Companies are constantly moving out of the area or downsizing, so it’s important for new companies to move in to boost the economy, Fullenkamp said.
However, the new jobs aren’t going to be just for local residents. The promise of a six-figure salary and an appealing job will lure workers from outside the state, Fullenkamp said. The question is more about whether people already in the Triangle labor market have the right skills. As part of the agreement with the state, Apple will retain jobs for the 1,100 people they employ in North Carolina.
If Google and Apple find a receptive labor force and cooperative government in the Triangle, the companies will likely remain and expand there long-term, Fullenkamp said.
“In just my informal chats with people I know who have been working in startups, there still seems to be an adequate amount of space downtown for now,” he explained. “There seems to be a lot of possibilities to expand fairly quickly.”
Fullenkamp doesn’t think the Triangle will be the next Silicon Valley in the east, but he does think Google and Apple will enhance the information technology cluster that already exists in Durham. They could fuel more local talent to participate in the startup scene and catalyze expansion in information technology, he said.
A negative effect on the startup scene
But some in the local startup scene are not enthusiastic about the expansions.
“Ugh. First Google and now Apple moving into the Triangle. While this is mostly good news for the area in general, I think it's very bad news for the Triangle startup scene,” read an April 26 tweet from Robbie Allen, the co-founder and CEO of Startomatic, a company that helps other companies get off the ground.
Allen has strong business ties to the Triangle: in addition to Startomatic, he founded the Raleigh- and Durham-based companies Automated Insights in 2011 and Infinia ML in 2017.
Allen believes that Google and Apple’s expansion will crowd out Durham’s startups by increasing competition for already scarce engineering talent.
“It's hard to find good engineers, designers, project managers, product managers anywhere, and it's definitely challenging in the Triangle,” Allen wrote in an email to The Chronicle.
Fewer new entrepreneurs in the Triangle are career risk-averse, since starting a company is viewed as risky, he wrote. People are more likely to work at a larger, established company that offers less risky careers.
“In an environment where more people value safe career options, Apple will be another option that may prevent a would-be entrepreneur from starting a company because they can go and make $200,000 per year at Apple,” Allen wrote.
Startups already have limited resources and pay employees much less than Apple's reported $160,000 to $200,000 salaries, he wrote. These high sums can lead to salary inflation that can negatively impact small businesses.
Allen does believe there are benefits to Google and Apple moving to the Triangle area, including an increase in the area’s national profile. However, as a small-business advocate, he doesn’t think that the pros outweigh the cons.
“I know I'm in the minority of that. I'm sure lots of people view [Apple coming] as a major positive,” Allen wrote. “That's ok and I understand the reasons. I just think it puts more pressure on the startup community in mostly unpleasant ways.”
Another major downside of Google and Apple moving to the Triangle would be the increase in congestion. The living space between Durham and Chapel Hill is largely filled, according to Fullenkamp. There are fewer places to live that are easily within reach of the Research Triangle, meaning workers will have to move to far-flung suburbs like Mebane and Roxboro.
“We're talking about people having longer and longer commutes,” Fullenkamp said. “We have transportation infrastructure that was already on the verge of being outstripped, and this will definitely outstrip it and lead to big congestion problems. And that's going to make life a lot less pleasant.”
Allen agreed that congestion will increase. In a tweet about the Google and Apple expansion, he wrote that “traffic is only one form of congestion: shopping, parks, entertainment, etc. will get busier.”
Decreasing affordable housing
Besides increasing congestion, Google and Apple’s plans could also increase demand for affordable housing in Durham. The Bull City is already facing a major housing crisis, with roughly one in five people in poverty and many residents unable to afford housing, according to Anthony Scott, CEO of Durham Housing Authority.
The DHA owns and controls public housing in Durham. Independent of the city, it was created by state law and is both federally funded and locally implemented. DHA manages and owns about 2,000 public housing units and administers almost 3,000 section eight vouchers, Scott said.
Even if housing is built for employees of Google and Apple, it doesn’t help the people who aren’t similarly making $187,000 per year.
“There's a lot of housing in Durham and more being built, but the problem is that it is out of reach for many of our Durhamites,” Scott said. “Because of education levels, because of skill levels, they are not able to tap into this incredibly robust economy that we have in the Triangle area.”
Scott believes housing in Durham is just too expensive, and the housing that's being built is currently “above the luxury market.”
“You're seeing apartments that are going for $2,000 and up,” Scott said. “There's one complex that I looked up and their rent is as high as $6,000 a month. I think, ‘Who can afford that?’ It really is really an expensive place and getting more so.”
The people moving to Durham tend to make substantially more money than the people currently living there, he said, which means they can more effectively cope with increased housing costs. Homeowners or realtors who are looking to sell would benefit but low-income residents would be worse off.
Google and Apple had an incentive to choose the Triangle because the area is a lot more affordable than California, Scott said. Though Google and Apple have committed over a billion dollars for affordable housing, their efforts have focused mainly in California.
“Are they going to create a similar kind of housing fund here—especially Apple since they're calling this an East Coast headquarters—or at least reallocate some of the funding that they committed to California?” Scott asked. “That's an important question that those companies need to respond to because they are clearly going to have an impact on affordability here.”
Scott hopes Google and Apple will commit to benefit Durhamites of all income levels.
“It's easy to appeal to people that you're trying to bring in, but any company that's coming to this area or exists in this area needs to be able to provide adequate housing and security for the folks that work with them, from the janitor all the up to the CEO,” Scott said.
Apple intends to establish a $100 million fund to support schools and initiatives across North Carolina. Additionally, $112.4 million from state income taxes paid by Apple’s new North Carolina employees will help fund infrastructure projects for rural communities, such as broadband, roads, bridges and public schools. Apple predicts these investments will generate over $1.5 billion annually for the state, according to their press release.
Implications for university students
As Duke computer science and engineering students begin searching for jobs, they will potentially consider tech careers at Google and Apple. With the companies now so close to the University, there will be more opportunities for student employment and professional connections.
Senior Vineet Alaparthi is majoring in electrical engineering and computer science and is considering software engineering post-graduation. He has been interviewing with a variety of startups, but he plans to most likely work for IBM.
“I think [Apple and Google moving to the Triangle] is really cool,” Alaparthi said. “I don't know if they're actively recruiting this semester, but I think it's really great for future Duke students to have that pipeline and have that sort of culture around.”
Alaparthi said the new tech developments in the Triangle are a little late for seniors this year, but he thinks the companies will begin recruiting at Duke next year.
“Working at a company like Google and Apple, there's a lot of talent and a lot of different mindsets where you can learn a lot because of the diversity in the type of people they recruit,” Alaparthi said. “Having that in Durham, they're going to have more events on campus so students can get a better perspective on what it's like to actually work there.”
Senior Katherine Barbano, who is also majoring in both electrical computer engineering and computer science, said she is deciding between returning to Microsoft, where she worked this past summer, or going to a different company.
“I think [Google and Apple moving to Durham] will be really great for Duke in particular, since I'm sure when a lot of those bigger companies move to this area, they'll probably end up recruiting more from Duke and other schools in the area,” Barbano said.
Barbano said that most people will probably still want to move out to the west coast since that's the location for the companies’ headquarters, which usually have more opportunities for career advancement. However, she thinks that making the Triangle area more of a tech center will be helpful for Duke students’ job prospects.
“I feel like having a big tech presence will probably help bring more potential undergrads to Duke,” Barbano said. “Schools in California probably get a lot of students who are attracted to Silicon Valley-type environments, so if Duke is more in an area like that, then they'll probably have more people apply that have an interest in tech.”
Barbano isn’t ruling out the possibility of staying in the Triangle to work at Google or Apple.
“I've just always really wanted to go to the West Coast, so I probably would lean more towards going there,” Barbano said. “But if the work was interesting enough and the office had enough new grads where I wouldn’t feel like I'm going alone into a new work environment, then maybe I would consider it.”
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Alison Korn is a Pratt junior and enterprise editor of The Chronicle's 118th volume.