By Nancy Amdur
NASA and the General Services Administration’s recent announcement that a Google subsidiary was awarded a lease for nearly 1,100 acres at Moffett Federal Airfield near Mountain View marks just the latest deal in the search engine giant’s property buying and leasing binge over the last couple years.
This new lease plumps Google’s portfolio in Silicon Valley, where it already carries 8.4 million square feet of office space, including more than 1 million square feet added in 2013, according to research by Cassidy Turley, a commercial real estate services firm.
“Google has landbanked quite a bit of space to accommodate their growth, but only they know how fast they will hire,” said Phil Mahoney, an executive vice president with commercial real estate brokerage Newmark Cornish & Carey in Santa Clara.
While Google typically keeps its real estate plans close to the vest—and did not return calls for comment for this article—area brokers and analysts surmise that the growing company is accumulating property to prepare for product expansion and the inevitable need to add staff. Google now carries an estimated 20,000 employees in Silicon Valley and projections call for more than 25,000 total locally, according to Cassidy Turley’s report.
“Google already is bursting at the seams in its current physical building, and its going to continue to find ways to expand, because over the next five years they will bring in more top talent,” said Tim Bajarin, a principal analyst with Campbell, Calif.-based Creative Strategies, a technology consulting firm.
The Moffett Field agreement calls for Google’s Planetary Ventures LLC to restore the historic Hangar One within 18 months. The company also will rehabilitate and use two other hangars and control the golf course and airfield, said Deborah Feng, the associate director at the field’s Ames Research Center. The lease allows for 90,000 square feet of new development. Google indicated in its proposal that it will use the hangars for research, testing, assembling and development of new technologies, Feng added.
Google previously inked a ground lease to build a 1 million-square-foot campus on 42 acres in a separate area of Moffett Field. Construction started there but was put on hold for a design adjustment.
Also among Google’s recent acquisitions is last summer’s approximately $67 million cash purchase of seven buildings comprising 200,000 square feet in an office park on East Meadow Circle in Palo Alto. The collection of one- and two-story office buildings, built in the 1950s and ’60s, are located about 2.5 miles north of the company’s Mountain View headquarters.
Google has not yet told the city its plans for the properties, said Aaron Aknin, Palo Alto’s assistant planning director. The city is considering adjusting zoning in the area to allow denser developments on East Meadow Circle properties closer to Highway 101 and will soon conduct an environmental impact report for the area.
The City of Palo Alto also secured funding for an $8 million to $10 million pedestrian-and-bike bridge over Highway 101, which would connect East Meadow Circle to other property Google owns, including a 22,300 square foot office/R&D building at 1010 Corporation Way in Palo Alto that it purchased in October. The bridge should be complete in roughly five years, Aknin said.
Google’s rapid expansion is not unprecedented but does rank it among the quickest growing tech companies in Silicon Valley history.
“It’s certainly one of fastest growers ever,” along with Apple and, in 1999-2000, Cisco Systems, Mahoney said.
Apple now carries more than 9 million square feet of office space and expects to add another 7,400 Silicon Valley employees by 2016, according to Cassidy Turley’s research.
Overall, the number of employees at high-tech software and services firms, including Google, Facebook and LinkedIn, rose nearly 37 percent since 2009, according to a report by CBRE Global Research and Consulting.
This buildup is keeping Silicon Valley a hotbed of the tech industry by drawing more companies looking for a deep pool of talent.
“More and more companies with needs for engineers are relocating here,” said Kalil Jenab, an executive managing director and principal at Cassidy Turley in Palo Alto.
Additionally, some Peninsula-based tech companies are moving to Silicon Valley in search of bigger and more modern office space, added Colin Yasukochi, director of research and analysis at CBRE in San Francisco.
Tech companies also tend to cluster around each other to create an innovative culture, Yasukochi added.
“In general, the tech field activity is very positive. It’s very promising for 2014,” Jenab said.