For pricey real estate and offices, I think it comes back to the restrictive zoning policies in SV and SF. Ideally, developers would build very dense buildings next to public transportation, but this is more a dream than the reality here.
I dono; everywhere I go in santa clara, I pass big construction projects.
I think a big part of it is also the cyclical nature of demand. You know that big apartment development in sunnyvale near murphy st? it started before the big real-estate crash... then sat there, skeleton-like, for several years. It's done now, of course, and more are on the way.
I mean, I'm sure zoning difficulties are part of it... but the dramatic increases and decreases in demand have also got to have something to do with it. The business cycle here is shorter than your typical amortization schedule for a building. And yes, that isn't going to stop anyone from building on the upswing (if you structure it right, bankruptcy laws being what they are, you have a limited downside, and not much limit on the upside) - but when the cycle isn't "up" - people just stop building.
Caltrain is already over capacity at peak times. I agree that there needs to be more accommodation near public transport, but I think they'd be better off building more public transport first!
The south bay (south of Diridon) is poorly-served by Caltrain - 3 trains each way per day, weekdays only, no bullets. I think it'd make a great SV extension with its cheap(er) real estate and easy access to SF. I know a lot of SV types with families who are in Morgan Hill/Gilroy because they can actually afford decent family housing without spending 50%+ of their income on it.
