Cush & Wake: Google Clouds the Silicon Valley Market

Google, Silicon Valley, Mountain View, Palo Alto, Sunnyvale, Cushman & Wakefield, real estate, Bay Area real estate news
Cloud placement in the map marks buildings owned or leased by Google
Cloud placement in the map marks buildings owned or leased by Google
Cloud placement in the map marks buildings owned or leased by Google
140+ Buildings Across Three Silicon Valley Cities: Mountain View, Palo Alto, Synnyvale

Even as this newsletter is being written,Google is negotiating to control more prime SiliconValley soil.To say Google is rapidly expanding would be a considerable understatement, perhaps better characterized as a mass consumption of real estate.Much of the 94043 zip code (MountainView) is already under its control and Google’s calculated march continues into Palo Alto and Sunnyvale. Three sizable acquisitions grabbed headlines in the last two months: the (former) Synopsys four- building campus was purchased for $244 million and just last week Google invested nearly $100 million in nine more MountainView buildings. While this is great news for many building owners, it leaves the market a little cloudy for other, less prominent, Silicon Valley occupiers.

Tenants are being crowded out of Mountain View, Palo Alto and Sunnyvale and forced South. As a result, asking rents have continued an upward climb and displaced tenants are challenged with navigating through extremely tight market conditions and assuming inflated asking rents. The problem scales with the complexity of the space requirement. Since the majority of what Google is buying is strictly for land value, many specialized R&D assets will be removed from the market completely.There is no new R&D supply in the proposed pipeline, adding another layer of complexity for tenants looking for conventional R&D space.

Is it possible Google’s appetite for Silicon Valley will be fulfilled in the near term or is it feasible this is the calm before the storm?

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