Google in US$1.6b push for expansion in Silicon Valley
Technology firm grows its base in Silicon Valley with property leases and purchases
Google is accelerating a real estate deal spree, spending US$585 million to buy more than half of a Silicon Valley office park and agreeing to lease an entire campus in development to make space for its growing workforce.
The owner of the world's largest search engine bought six office buildings at Pacific Shores Centre in Redwood City, California, from Starwood Capital Group and Blackstone Group. It also plans to occupy all of Moffett Place, a six-tower development on 22 hectares in nearby Sunnyvale, according to Google spokeswoman Meghan Casserly.
Google has spent billions on property leases and purchases as it expands hiring and makes acquisitions. The company said in its quarterly report that it signed office leases for a total commitment of about US$1 billion up to 2028 and bought land and buildings for US$585 million, without disclosing details.
"I just can't point to another major technology company that's taken down so much real estate in a relatively short period of time," said Mark Kuiper, senior vice-president with Colliers International. "Google is a huge employer and they're putting their stake in the ground and saying Silicon Valley is our home base."
The company had 55,030 full-time employees as at September 30, up almost 19 per cent from a year earlier, the report shows.
Its most recent real estate deals involve projects developed by Jay Paul. The San Francisco-based company's Moffett Place project is 1.9 million sqft, according to its website.
Jay Paul developed the Pacific Shores Centre office complex in the early 2000s. The waterfront campus includes sports fields and a park, and is next to restored wetlands that are part of the San Francisco Bay Wildlife Refuge.
The properties Google bought comprise about 934,200 sqft of class A office space and a 38,000 sqft fitness centre that included a gymnasium, a pool and a spa, two sources with knowledge of the matter said. There is 1.7 million sqft of office space at the complex.
Starwood Capital bought the complex in December 2006, near the height of the commercial property market, from its developer and Walton Street Capital and immediately resold two of the buildings. Starwood Capital paid about US$833 million in the deal, its first office acquisition in the San Francisco Bay area.
In 2011, Blackstone bought an US$80 million junior loan on the office complex at a discount in an effort to gain ownership if Starwood Capital defaulted, two sources with knowledge of the purchase said at the time. Blackstone then gained an equity stake in the properties sold to Google through a loan restructuring.
Outside Silicon Valley, Google's major real estate purchases include New York's 111 Eighth Avenue, a former industrial warehouse that takes up an entire block in the Chelsea neighbourhood, which it acquired for US$1.8 billion in 2010. In July, the company bought a San Francisco office building and agreed to lease space at a nearby tower.