Professional Services, Manufacturing Grow Silicon Valley Commitment
| By Sharon Simonson |
Business investment in Silicon Valley is accelerating, led by professional services and electronics manufacturing companies, according to new numbers from the Santa Clara County assessor.
While the taxable value of all property—including real estate and business equipment—rose 3.25 percent year over year countywide, the taxable value of business equipment alone rose nearly 7 percent. That increase came on top of a more than 2 percent climb in the value of business property the year before; in 2009, the value fell by more than 8 percent.
The value of equipment used by electronics manufacturers has climbed nearly 13 percent in the last two years to $5.13 billion, the assessor said. That’s well below the value of a decade ago but above the $5 billion threshold for the first time in three years.
“We are the sixth-largest county in the state (by population) but the second largest by the business personal property roll, so it is much more meaningful in Silicon Valley,” said Santa Clara County Assessor Larry Stone.
“What is really interesting is that this recovery from the Great Recession is being led here in Silicon Valley, and the machinery and equipment, tenant improvements and fixtures are a big part of that,” he said.
The steep climb in the value of business equipment was led by huge investment from Google Inc. and Apple Inc., both of which have significantly expanded their valley footprints in the last 18 months with leasing and property acquisitions. Both are building new corporate offices, too.
The value of Google’s business property rose to more than $1.09 billion from $542 million the preceding year. The company leapfrogged Maryland-based military contractor Lockheed Martin Corp. as the second-largest business property owner and user in the county. Apple expanded its business personal property investment by not quite $200 million in the year just past, to $670 million.
Apple is the fourth-largest business property owner in Santa Clara County, its rank unchanged from a year earlier.
The investment surge put Google, a search engine and advertising company, within striking distance of hardware manufacturer and business services provider Cisco Systems Inc., which has been Santa Clara County’s largest business personal property owner since at least 2001. Cisco’s business personal property value is just less than $1.8 billion, according to the assessor, but it has not grown from a decade ago.
The increases were not limited to the headline-grabbing companies or the expected. Santa Clara-based semiconductor maker Intel Corp. saw the value of its business personal property in Santa Clara County rise by not quite $150 million year over year to a total of $623 million. (That is down from more than $1.2 billion worth of business personal property in the county in 2001, however.)
Fabless chipmaker Marvell Semiconductor Inc., which ships more than a billion chips a year and has its U.S. headquarters in Santa Clara, upped its business property investment by 8 percent to more than $107 million year over year.
Hewlett-Packard Co. increased the value of its business equipment in the county by $8.4 million to $284.4 million. Juniper Networks Inc., which is building a huge expansion to its existing campus in Sunnyvale, increased the value of its business property by $88 million to $265 million, a nearly 50 percent climb.
Phillips Lumileds Lighting US LLC, which makes light-emitting diodes for illumination, increased its equipment investment to $234.3 million from $172.9 million last year, a 35.5 percent increase. The company is owned by Netherlands-based Royal Phillips Electronics, which has more than 120,000 employees worldwide.
Data center operator Xeres Ventures LLC, a wholly owned subsidiary of data center company Dupont Fabros Technology Inc., leapt to the 13th largest business personal property owner in the county with equipment valued at more than $213.4 million, up from less than $98 million last year. The Washington, D.C., company has a large Santa Clara data center.
Neither Xeres nor DuPont Fabros appeared on the county list of top-40 business equipment owners last year.
Another data center company, Savvis Inc., which provides hosted technology services for companies, also penetrated the top-40 list for the first time with not quite $100 million in business equipment value.
In aggregate, the data illuminate the broader industrial and economic flows in the county. Professional services, a grab bag of occupations and enterprises that includes accountants, architects and lawyers as well as bicycle repair and taxidermy, has consistently expanded its footprint. It now represents nearly a third of the business personal property roll, compared to 20 percent a decade ago.
During the same time, the manufacturing footprint countywide has clearly receded. In 2001, electronics manufacturing was the biggest industry in Silicon Valley based on the value of its business equipment, with nearly $7 billion in business personal property value. It now has $5.13 billion.
Still, manufacturing remains an important part of the valley economy with computer manufacturers, semiconductor makers and electronics manufacturers owning the most valuable business property in the county. Together they represent more than $12 billion of the $27.9 billion business personal property roll, or not quite 44 percent.
The growth is heartening, Stone said, but context remains important: “These are not record achievements. At one time during the dot-com boom, our business personal property roll was above $30 billion.” This year it is $27.9 billion, up from $26.2 billion last year.