A $14 billion bet — and not on the horses

This spring, Eastview Development started construction on the Esplanade, a 294-unit apartment rental complex in Upstate New York just outside Saratoga Springs. The demand for the new complex is being driven by a single factor: a massive new development just down the road.

GlobalFoundries — a Santa Clara, Calif.–based semiconductor manufacturer owned by the government of Abu Dhabi — already has thousands of employees working on its existing 2.4-million-square-foot facility — called Fab (as in fabrication) 8.1.

But last month it won zoning approvals to build a second facility, this one 2.3 million square feet, called Fab 8.2. It reportedly plans to spend a colossal $14.7 billion on the site, including construction, surrounding infrastructure and technology investments.

The approval comes on the heels of reports that GlobalFoundries is in talks with Apple to manufacture the chips it needs to make its laptops, iPhones and iPads run. While the company declined to comment on the rumors about Apple, snagging the computer company as a client would be a game-changer — for both the company and the region. A spokesperson said Fab 8.2, which would be adjacent to Fab 8.1, is still pending, and published reports note that the construction timeline may depend on whether Apple and other technology companies sign on as clients.

Although there is no public database that tracks all planned projects, Fab 8.2 appears to be New York State’s biggest development outside of New York City. (See “Tallying the biggest new buildings in the U.S.”)

The project has already turned this once-sleepy area, principally known for its horse-racing tracks and mineral springs, into a destination for engineers, business executives and other tech talent. And sources say that will only continue once the new campus gets underway.

To date, Fab 8.1 has produced more than 17,000 area jobs (both on its campus as well as servicing the new population of employees and residents).

Paul Sausville, supervisor of Malta, the town of approximately 15,000 where GlobalFoundries is located, said GlobalFoundries has helped Saratoga County achieve one of the lowest unemployment rates in the state. “It’s 5.7 percent, which is pretty good in this economy,” he said.

The project is also having a major ripple effect for development and real estate in the area. More than 600 apartments have been approved for construction in Malta, with an additional 5,000 single-family homes in the county, according to the Saratoga Economic Development Corporation. Almost 3,500 new homes and 1,000 apartments are going up in in the nearby town of Halfmoon alone.

Local officials said they expect the current pace of development to keep up with the job growth spurred on by GlobalFoundries. For now, the current housing stock is absorbing the newcomers.

“There’s some hope that we’ll kind of come into balance,” once the new housing construction is complete, Sausville said, “and, over the long haul, as we have more and more jobs, there will be a greater balance between the housing that’s available and the jobs that are here.”

If you build it

The presence of GlobalFoundries in Saratoga County isn’t an accident.

It’s the result of careful planning by local and state officials ever since the tech company Samsung considered setting up a chip-manufacturing plant in New York State in the late 1990s, but decided against it. (Ironically, the reason GlobalFoundries might have a chance in clinching Apple as a client is because the computer company is reportedly considering dropping Samsung, its current chip manufacturer.)

Local and state officials vowed such a rejection would never happen again: With $9 million in state funding, they created the roughly 1,400-acre Luther Forest Technology Campus, a technology and business park. They also secured pre-approvals for chip-manufacturing to woo another giant engineering or tech company.

The company that ultimately signed on was GlobalFoundries, which struck a deal in 2006 to become the first tenant at the campus. New York State provided GlobalFoundries with $1.4 billion in incentives to seal the deal, and GlobalFoundries commenced construction on Fab 8.1 in July 2009.

Once GlobalFoundries started production there in 2011, new housing developments, such as Eastview’s Esplanade, a rental, started springing up nearby.

Robert Kohn, a partner at the Florida-based Eastview Development, said the influx of GlobalFoundries’ employees has increased the demand for housing. He said it “certainly” impacted the company’s decision to build there. (Currently many GlobalFoundries employees commute from the Albany area, which is about 20 miles south, Kohn said.)

Monthly rents at the Esplanade are expected to range from $1,200 to $2,200; pre-leasing is expected to start this fall.

According to the real estate website Zillow, in August, the median sales price for a home was $347,400 in Saratoga Springs and $238,500 in Malta. The rental median in Saratoga Springs ranges from $1,900 to $2,300. Entire houses in Malta, meanwhile, can rent for less than $2,000 a month.

The zoning changes Malta approved in August leave the ball very much in GlobalFoundries’ court as far as seeing the massive expansion through. The company has already spent nearly a year complying with environmental reviews and other red tape.

“My guess is they wouldn’t go through all this effort if they didn’t want to do something,” Sausville said.