• Thu
  • Aug 21, 2014
  • Updated: 3:25am
Apple
NewsWorld
UNITED STATES

Tech firms' trophy office plans may signal high point in their fortunes

Grand HQs of Apple, Facebook, Google and Amazon could prove costly monuments to vanity

PUBLISHED : Wednesday, 29 May, 2013, 12:00am
UPDATED : Wednesday, 29 May, 2013, 2:40am

While much of corporate America is retrenching on the real estate front, the four most influential technology companies in the US are each planning headquarters that could win a Pritzker Architecture Prize for hubris.

Amazon.com last week revealed plans for three verdant bubbles in downtown Seattle, joining Apple's circular "spaceship", Facebook's Frank Gehry-designed open-office complex and a new "Googleplex" on the list of planned trophy offices.

It signals a desire, a statement, to say that we're special, we're different. We have changed the world and we are going to continue to change it. t's also a reflection of robust bank accounts. They have a lot of cash

"It signals a desire, a statement, to say that we're special, we're different. We have changed the world and we are going to continue to change it," said Margaret O'Mara, associate professor of history at the University of Washington and an expert on the history of Silicon Valley. "It's also a reflection of robust bank accounts. They have a lot of cash."

Historically, however, when a company becomes preoccupied with the grandeur of its premises, it often signals a high point in its fortunes. These fantastical buildings may end up as little more than costly monuments to vanity and a loss of focus on the core business that made for success in the first place.

"I've been thinking the Apple spaceship is going to get nicknamed the 'Death Star' because the project is so big and the timing is so bad," said hedge fund manager Jeff Matthews of Ram Partners.

The building is coming to fruition just as Apple's product cycles may be maturing, he said.

"It is such a classic contrary indicator that you just get the shakes," Matthews said.

He no longer holds Apple stock.

Walter Price, who runs technology investment funds at RCM Capital Management, shares that outlook.

"When companies build big headquarters, it's usually when they're doing really well and have strong outlooks, and that often coincides with a peak in their stock," he said.

Amazon's design, presented to Seattle city planners last week, includes three steel and glass spheres almost 30 metres high that will serve as the centrepiece for three new skyscrapers that will house a rapidly growing workforce in downtown Seattle.

The plans call for "a series of intersecting spheres with ample space for a wide range of planting material, as well as individuals working alone or in groups."

Google, the world's biggest internet search company, has outgrown its original headquarters in Silicon Valley's Mountain View and is planning to build a 102,000 square metre Googleplex nearby.

It will be named Bay View and comprise nine rectangular buildings, horizontally bent, with so-called living roofs surrounded by courtyards and connected by bridges. No employee will be more than a two-and-a-half-minute walk away from any other employee, a design aimed at encouraging collaboration.

Facebook is taking the collaborative idea a step further, with plans for Facebook West, an addition to its main campus in Menlo Park, California, that will be the size of seven-and-a-half American football fields.

Facebook hired Gehry to bring his trademark style of unexpected angles and understated drama to what is essentially one enormous open-plan office.

Apple has the most ambitious plans: a 260,000 square metre glass ring on 71 hectares of land. It will be in part a monument to former chief executive Steve Jobs, who was closely involved in the planning before he died in 2011.

Tech companies have amassed large cash piles in recent years, leaving many overcapitalised, said Bill Smead, head of Smead Capital Management.

"Overcapitalised companies often don't perform well," he said, "and leaders of overcapitalised companies sometimes squander the money."

Tech firms' building plans may radiate optimism, but they have inauspicious precedents.

AOL-Time Warner started building a headquarters on the same scale as Apple's plans in New York just as the dotcom bubble popped in 2000, destroying more than three-quarters of the company's value.

The New York Times Co, Wall Street bank Bear Stearns and chemical company Union Carbide also built ambitious HQs just before their businesses hit tough times.

Share

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

This article is now closed to comments

crbfile
not entirely true. I worked at The Home Depot. After the new HQ was constructed in 1997 the stock tripled in the following 3 years.
 
 
 
 
 

Login

SCMP.com Account

or