It is well known that the entire Bay Area is filled with high-tech companies, it creates so many jobs, making here the highest income in the U.S. As the battle of residential real estate is heating up over the years, so is the battle for commercial properties among tech giants.
Facebook has already purchased 21 warehouses and office buildings right outside of their Menlo Park headquarter for $395 Millions, they are building their new headquarter, called the west campus, which is scheduled to be opened around May 2015. The new campus is designed by the famous architect Frank Gehry. It also includes an underground tunnel that connects the original campus to the new campus under Bayfront Express way.
According to real estate data company, Real Capital Analytics, in 2014 Google spent $1 Billion more purchased 19 properties around Bay Area from Mountain View to Redwood City. They have already spent $2.5 Billions since 2005 for real estate purchases. Part of their plan is to build a 250,000 SQFT headquarter.
It is cleared that tech companies are preparing for their expansions in the coming years, In 2014, Google's new hires were 5800 people and Facebook's employees has reached 9199 people and it is expecting to grow even more.
It is not uncommon for companies to buy and store lands and real estate properties, it is usually a good strategy during time of expansion. It is also to invest when real estate market is down and preventing other potential competitors to settle in nearby area. As the companies are growing, the silicon valley is going to be overcrowded.
In the Bay Area, high-tech companies can be more competitive in real estate investing than traditional real estate investment companies and land developer companies. According to real estate company DTZ, in 2014 the commercial real estate building has reached $329/SQFT, it was only $299 in 2013 and $190 in 2009. Tech companies have enough cash to invest in real estate, even if their expansion still has years to come, they can still lease the property to other companies for the time being.
Besides Google and Facebook, Linkedin, Salesforce and Tesla have also spent money purchasing real estates. Salesforce spent $640 Million for a 41 stories building and 2 other high-rise buildings next to it, which are currently under construction.
Let's not forget Apple Inc. In the last 5 years Apple has been buying real estate in its Cupertino area. They didn't make any new purchase in 2014, but Apple is currently constructing it's new spaceship theme new campus.
Another reason why high-tech companies starts to purchase their own real estate is that they don't want to lease properties anymore. Because most of the property owners don't want to add modern features on the properties. According to real estate attorney Stephen Berkman from Paul Hastings, that Tech giants have a lot of demands from the real estate properties, such as food truck, bicycle storage building, daycare center, rock climbing and pet shelters. Its better you own the property for making these features. Paul Hastings's clients include Salesforce and Facebook.
Therefore the battle of commercial real estate will continue in the Bay Area along with the battle of residential real estate, at least in the next 5 to 10 years.
sources comes from:
http://sports.yahoo.com/video/silicon-valleys-real-estate-wars-164108236.html
