The problem is that the Valley wants to stay suburban and the market is demanding that it become a city. Google could put a set of huge towers on this land with housing and office space and retail.
Can you clarify who "the Valley" is, and who "the market" is?
The Valley is the combined local governments, and the market is the companies and workers who both see value in staying in the area. The land is so expensive that if one locality raised the building restrictions, you'd see massive towers going up.