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Vallejo modular housing startup Factory OS has raised $55 million from tech giants Google and Facebook, the software firm Autodesk, Citigroup, Morgan Stanley and asset manager Lafayette Square Holding.

The money will enable Factory OS to increase production at its second Mare Island factory and expand to Los Angeles, the company said Friday. Factory OS cuts the cost of housing construction by pre-assembling “modules” of apartment buildings and shipping them to project sites. Factory OS raised $22.7 million last year.

The company, which has completed almost 1,000 housing units in Northern California, said its costs are 20% to 40% lower than those of traditional construction. It seeks to revolutionize housing development, which has relied on the same techniques for decades. San Francisco had the highest construction costs in the world last year, according to consulting firm Turner Townsend. Factory OS CEO Rick Holliday said each non-modular apartment can cost up to $750,000 to build.

The company was founded in 2017 by Holliday, a veteran developer who also co-founded major affordable builder Bridge Housing, and general contractor executive Larry Pace. They had both worked on housing projects for decades in the Bay Area and saw an industry plagued with inefficiencies. The “OS” stands for both off-site, a reference to the company’s building method, and operating system, a reference to its embrace of technology.

At Factory OS’ first project, the Union near the West Oakland BART Station, Holliday said erecting 100 apartments took only 10 days, though preparation of the housing site and other work adds additional months of construction. Modular construction can shave about a year off of housing development, Holliday said.

“I think we finally got to proof of concept,” he said. “You save a lot of time and a lot of money.”

The investment by Google and Facebook follows their separate $1 billion commitments to producing housing in the Bay Area.

“Our investment in Factory OS — an innovator building technology to bring down the cost of housing construction — is part of our broader company initiative to help fund scalable and affordable solutions that will help to alleviate the housing crisis in California,” John Tenanes, Facebook’s vice president of global facilities and real estate, said in a statement.

In January, Factory OS plans to deliver around 250 apartments to Google in Mountain View, where the company plans to house visiting employees, Holliday said. Factory OS has also worked on projects in El Cerrito, Emeryville, Oakland, San Francisco and Truckee (Nevada County), and it has commitments for nearly 500 homes in the Los Angeles area. Several projects are on BART land, where the transit agency is seeking to promote housing development.

The company has 500 workers who earn wages of $25 to $30 per hour, Holliday said.

The coronavirus pandemic stalled construction at some projects, and fewer than 10 workers in its factory were infected, he said. The deep recession and falling rents are expected to chill real estate construction, which could be challenging. Modular companies like Zeta Communities previously went out of business in part because demand from developers was inconsistent.

“Market-rate housing is going to be not very significant for at least two years” Holliday said. “This will pass.”

About two-thirds of the company’s completed projects are affordable or supportive housing, which includes apartments for the formerly homeless, and Holliday expects that percentage to increase.

“No matter how bad COVID is or the economy, there’s about 10,000 tax-credit units that get built in California in a year,” said Holliday, referring to below-market-rate projects funded in part through corporate tax credits. “There’s a ton of money out trying to find finished apartments for supportive housing.”

“If you just take those two markets by themselves and you focus just on them, we’ll be doing 5,000 units a year when we’re really humming,” he said.

San Francisco labor unions have opposed modular construction because jobs are located outside of the city, but the idea is gaining traction. Factory OS is working on 145 modular units in the South of Market neighborhood, which started construction this year, and projects on Treasure Island and on Mission Street, also in SoMa. The company’s employees include members of the carpenters union.

“We embrace technology and are proud to work with Factory OS to grow the workforce, enhance skills and productivity, and create new middle-class jobs with living wages and benefits,” Bob Alvarado, executive secretary-treasurer of the Northern California Carpenters Regional Council, said in a statement.

Roland Li is a San Francisco Chronicle staff writer. Email: roland.li@sfchronicle.com Twitter: @rolandlisf

Oracle, one of Silicon Valley’s largest tech companies, is moving its headquarters from Redwood City to Austin, Texas — the latest firm to make an exit to territory with cheaper housing, less regulation and friendlier politics.

The company said the move will give employees “more flexibility” — an increasing priority for businesses, since the coronavirus pandemic has severed many workers’ ties to a physical location.

Oracle joins numerous Bay Area companies that have moved their headquarters to Texas in recent years or months, including Charles Schwab, McKesson and Hewlett Packard Enterprise. Other companies, including Apple and Dropbox, are keeping their Silicon Valley headquarters, but expanding their presence in Texas.

Continued migration could threaten Silicon Valley’s dominance as the world’s premier tech hub, built on the principle that a physical cluster of firms, from the world’s biggest tech giants to tiny startups, is stronger than being apart.

“Anyone who doesn’t believe that this latest departure isn’t a threat to California’s economy is a business climate denier,” Jim Wunderman, CEO of the Bay Area Council, a business group, said in a statement. “We are watching the unraveling of one of the world’s mightiest economies and the consequences will be devastating. California for too long has willfully ignored our awful business climate, even as we’ve enjoyed incredible success and prosperity.”

Texas Gov. Greg Abbott, a Republican who has urged companies to leave California, hailed the move.

“Texas is truly the land of business, jobs, and opportunity. We will continue to attract the very best,” he said on Twitter.

Oracle CEO Safra Catz is also a Republican who donated to Donald Trump’s presidential campaigns. Her joining the 2016 Trump transition team and Oracle Chairman Larry Ellison’s support for Trump, including a fundraiser, sparked protests among some employees.

Oracle said it will keep offices in the Bay Area, but it wasn’t clear whether it plans to reduce its real estate. Many employees will be able to choose their office location, Oracle said, if their role allows it, or continue to work from home.

“We will continue to support major hubs for Oracle around the world, including those in the United States such as Redwood City, Austin, Santa Monica, Seattle, Denver, Orlando and Burlington, among others, and we expect to add other locations over time. By implementing a more modern approach to work, we expect to further improve our employees’ quality of life and quality of output,” the company said. A spokeswoman declined to comment further.

Oracle occupies 3.5 million square feet of Silicon Valley office space, concentrated in its Redwood Shores complex, Santa Clara and San Jose. The company has listed 263,000 square feet for lease at Redwood Shores and 449,810 square feet for lease in Santa Clara, according to marketing materials. Its name is on the Giants’ ballpark in San Francisco, a deal that runs through 2039.

The company opened its Austin campus in 2018 and said it would eventually house 10,000 employees there. It leases 1.3 million square feet in the Texas city, according to real estate data firm CoStar. Oracle has 135,000 total employees and a market capitalization of $182.5 billion.

Oracle OpenWorld, the company’s major 60,000-person conference, also moved out of San Francisco and was scheduled to be held in Las Vegas this year, before the pandemic forced its cancellation. OpenWorld has two more years booked in Las Vegas.

Moving a headquarters may not have a significant economic impact if a company keeps extensive operations like Oracle has in the Bay Area, said Chris Thornberg, founder of Los Angeles research firm Beacon Economics.

“These things tend to be mostly optical and shouldn’t be over-interpreted,” he said.

But, Thornberg contends, the business climate in California may have contributed to Oracle’s move.

He said the “preposterous degrees of regulation and controls,” coupled with the lack of affordable housing could be reasons. And the pandemic has only worsened the economic outlook, with state-level regulations constantly moving goalposts.

“We’re dealing with a phenomenal degree of uncertainty here,” he said.

Entrepreneur Jon Fisher, who sold his startup Bharosa to Oracle in 2007, said the high cost of doing business, along with recent disasters like wildfires, are pushing people out of the Bay Area.

“There’s a real reckoning both on the financial side and the environmental side now that everything is remote and people have gotten a taste of that,” he said. “With that as a catalyst … people are no longer locked.”

The Bay Area still has major advantages for tech companies, including access to venture capital, a skilled workforce and major research institutions, but the recent exodus is a warning sign, said Ahmad Thomas, CEO of Silicon Valley Leadership Group.

“It’s a real wake-up call. I think it is no surprise that it is very expensive to live here in California, and to do business in California,” he said. “Without change and without a clear acknowledgment and understanding of this shift we’re seeing in our economy, much of it brought along by the pandemic, we’re going to struggle to remain at the top,”

Chronicle staff writers Bryan Mena and Shwanika Narayan contributed to this report.

Roland Li is a San Francisco Chronicle staff writer. Email: roland.li@sfchronicle.com Twitter: @rolandlisf