Facebook $101MM Menlo Park Acquisition Signals Firm’s Commitment to Silicon Valley

Facebook, Menlo Park, TE Connectivity, Silicon Valley real estate, tech campus, Bay Area news, land sales

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By Nancy Amdur

Facebook, Inc. reinforced its commitment to Silicon Valley while preparing for future growth with a recently completed agreement to purchase a 59-acre office complex next to its new campus underway in Menlo Park.

The social media giant will buy the 10-building TE Connectivity Ltd. office campus at 300 Constitution Ave. Terms of the deal were not disclosed, but TE Connectivity spokeswoman Jane Crawford confirmed that the companies inked a “definitive agreement” for the sale, which should close within 90 days. Public documents state that the deal closed in September of 2014 for a price of $101,600,000.

Facebook will not yet use the property and instead will lease it back to TE Connectivity for several years, Crawford said.

“The adjacent property we’ve agreed to purchase is an investment in our future. We have no immediate plans to develop the property,” said a Facebook spokesperson in an e-mailed statement.

TE Connectivity is a global company that designs and manufactures products for various sectors, including the automotive, healthcare, aerospace, broadband communications and defense industries.

The company chose to sell its approximately 1 million-square-foot Menlo Park campus because it was being “underutilized,” Crawford said.

“We have 600 employees there, [but it] could suit many more employees,” she said.

The Switzerland-based company plans to remain in Silicon Valley and is evaluating other locations. “Silicon Valley is an important innovation hub for us,” Crawford said. “We have a commitment to stay in that region.”

Facebook now occupies a 1 million-square-foot, 57-acre Menlo Park campus that was the former home of Sun Microsystems, Inc. The TE Connectivity office park is located across the Bayfront Expressway from Facebook’s main headquarters and is adjacent to its not-yet-completed 434,000-square-foot West Campus, designed by renowned architect Frank Gehry.

Facebook is just the latest Silicon Valley technology company to purchase property for eventual growth. For example, Google Inc. has been snatching up space around its Mountain View headquarters for the past couple years, adding more than 1 million square feet of Silicon Valley office space in 2013, according to research by Cassidy Turley. Google now has a deal underway to buy a 400,000-square-foot office park at 700 E. Middlefield Road in Mountain View.

“Facebook being on a tear doesn’t surprise me,” said Garrick Brown, director of research at Cassidy Turley Commercial Real Estate Services in San Francisco, adding that the company has experienced “phenomenal growth.”

Among Facebook’s notable acquisitions this year were the $19 billion purchase of mobile messaging service WhatsApp in February and the $2 billion purchase of virtual reality technology firm Oculus VR in March. In 2012, Facebook spent $1 billion to purchase mobile photo-sharing app Instagram.

Tech companies’ strategy of gathering Silicon Valley space before needing it shows their confidence in the area, industry experts said.

“These long-range proactive acquisitions speak volumes” about the “long-term need to be and grow in Silicon Valley,” said Phil Mahoney, an executive vice president at real estate service firm Cornish & Carey Commercial Newmark Knight Frank in Santa Clara.

But Brown added these purchases also indicate the company is healthy.

“[It tells] the marketplace, ‘We’re not just ready for growth, we’re prepared for growth [and] we’re planning on growth,’” Brown said.

Image courtesy of Gensler

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