Apple Narrows Field of General Contractors for Massive Headquarters

Sharon Simonson

If there were any doubt that Apple Inc. intended to go forward with construction of its mammoth new campus in Cupertino following the death of its messianic founder, word from the region’s building industry is: Have no fear.

Apple honchos have been in final talks with at least two general contracting teams in a continuation of discussions that began before Steve Jobs’ death last month. And, according to two sources with direct knowledge, the global software, hardware and services company looks to have settled on a joint venture between DPR Inc. out of Redwood City and Skanska, the Swedish construction giant.

Other general contractors competing for the work include Turner Construction Co.; Swinerton Inc. and Tishman Construction, an AECOM company; Webcor Builders, Hensel Phelps Construction Co. and Balfour Beatty Construction, sources said.

The job has a construction value of more than $2 billion and has been considered a huge catch. One general contractor said his company planned to open a separate division just to manage the project if it were successful in landing the assignment.

“To build something of that magnitude requires a tremendous amount of resources,” he said.

Apple is a notoriously secretive company. Everyone with any direct knowledge of the project appears to have signed nondisclosure agreements. Executives affiliated with DPR, Webcor and Swinerton believed to have knowledge of the Apple project did not return calls and emails seeking comment. Construction of the project also was not discussed during Apple’s most recent conference call with analysts Oct. 18, according to SeekingAlpha.

Apple reported revenue for the quarter that ended in September of $28.3 billion, a record for the company and a 39 percent increase compared to the same quarter a year earlier.

Redwood City-based DPR has 17 offices coast to coast. It is the general contractor on the $1.5 billion, 878,000 square-foot UCSF Medical Center at Mission Bay, which has been underway for approximately a year. It is also building the 40,000 square-foot office building for The David & Lucile Packard Foundation in Los Altos. That is intended to be a net-zero structure.

In February, DPR, as part of a joint venture team, completed the $123 million Ray and Dagmar Dolby Regeneration Medicine Building for the University of California, San Francisco at its Parnassus campus. Apple’s One Stockton St. store in San Francisco, a nearly 17,000 square foot two-story outlet and Apple’s “flagship store,” was also a DPR project, according to the DPR Web site.

Apple took in $3.6 billion in revenue from its retail operation in the September quarter and had 357 stores worldwide at quarter end. It plans to open another 40 stores globally next year.

Skanska, which has 52,000 employees, is one of the 10 largest construction companies in the world. It has offices in Oakland and has completed multiple Northern California projects including a $181 million design-build central utility plant contract in Sacramento for the state of California and construction management of a $98 million addition and renovation at Regional Medical Center of San Jose, which it finished in 2008. The U.S. market represents the largest share of its business at 28 percent of revenue followed by Sweden at 23 percent. Its clients include Boeing, Ericsson, IKEA, ING, Nissan, Pfizer, Statoil and Wyeth.

The Apple project, designed by global architect Norman Foster of London-based Foster + Partners, is also slated to be a net-zero building, Apple project manager Terry Reagan told the city of Cupertino at a September meeting. The company contemplates having 700,000 square feet of photovoltaic cells on site, Reagan said. “We want to generate an equal amount of power or more than we consume,” he said.

The Apple project will involve the demolition of more than 20 buildings with 2.7 million square feet on a nearly 180-acre site. The company intends to build a 2.8 million square-foot, four-story ring to house 12,000 to 13,000 employees. The campus will include below-grade parking large enough for nearly 5,000 cars and a parking structure for more than 4,000 cars plus a 1,000-seat auditorium and a 300,000 square-foot research center.

The city will analyze the environmental effects of 3.4 million square feet of construction on the site as part of its responsibilities under the California Environmental Quality Act. Apple hopes to break ground in the second half of 2012 and to complete the project three years later.

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