The math: most companies are doing roughly 150 ft2/employee. You can get good office space for $60 ft2; quite nice office space for $80 ft2. On the lower end, that will come out (+ services) to $5.50-$6 ft2/mo. So maybe $800 - $1200/emp/month.
Note you can do much better than that $60 if you don't want to be close to caltrain. I looked at stuff in the $40 range that was your standard peninsula office park.
As for housing costs... the bay area is fucking stupid. Next round (I'm a founder) we're going to be opening an engineering office anywhere else. Candidates are probably Chicago (ugh that flight), Oregon, Seattle, maybe Reno. The difference is is $150k barely making it or a pretty decent salary.
It's not just housing either. A founder friend bought health insurance for employees in Oregon. She thought her broker screwed up the price was so low.
Don't even get me started on the fuckwits in our government and the commute situation.