Google Grows With $1.6 Billion in California Office DealsHui-yong Yu and Brian Womack
Google Inc. is accelerating a real estate deal spree, spending $585 million to buy more than half of a Silicon Valley office park and agreeing to lease an entire campus in development to make space for its growing workforce.
The owner of the world’s largest search engine bought six office buildings at Pacific Shores Center in Redwood City, California, from Starwood Capital Group LLC and Blackstone Group LP. It also plans to occupy all of Moffett Place, a six-tower development on 55 acres (22 hectares) in nearby Sunnyvale, according to Meghan Casserly, a Google spokeswoman.
Google, based in Mountain View, has spent billions on property leases and purchases as it expands hiring and makes acquisitions. The company said in its quarterly report filed two days ago that it signed office leases for a total commitment of about $1 billion through 2028 and bought land and buildings for $585 million, without disclosing details.
“I just can’t point to another major technology company that’s taken down so much real estate in a relatively short period of time,” said Mark Kuiper, senior vice president with Colliers International in San Jose, California. “Google is a huge employer and they’re putting their stake in the ground and saying Silicon Valley is our home base.”
The company had 55,030 full-time employees as of Sept. 30, up almost 19 percent from a year earlier, the filing shows.
The most recent real estate deals involve projects developed by Jay Paul Co. The San Francisco-based company’s Moffett Place project is 1.9 million square feet (177,000 square meters), according to its website.
Jay Paul developed the Pacific Shores Center office complex in Redwood City, about 11 miles (18 kilometers) from Google’s main office in Mountain View, in the early 2000s. The waterfront campus includes sports fields and a park, and is next to restored wetlands that are part of the San Francisco Bay Wildlife Refuge.
The properties Google purchased comprise about 934,200 square feet of Class A office space, as well as a 38,000-square-foot fitness center that includes a gym, pool and spa, according to two people with knowledge of the matter, who asked not to be named because the details are private. There’s 1.7 million square feet of office space at the complex.
Starwood Capital bought Pacific Shores Center in December 2006, near the height of the commercial-property market, from its developer and Walton Street Capital LLC, and immediately resold two of the buildings. Starwood Capital paid about $833 million in the deal, its first office acquisition in the San Francisco Bay area.
Blackstone in 2011 bought an $80 million junior loan on the office complex at a discount in an effort to gain ownership if Starwood Capital defaulted, two people with knowledge of the purchase said at the time. Blackstone then gained an equity stake in the properties sold to Google through a loan restructuring.
Tom Johnson, a spokesman for Barry Sternlicht’s Starwood Capital in Greenwich, Connecticut, and Peter Rose, a spokesman for New York-based Blackstone, declined to comment.
Outside of Silicon Valley, Google’s major real estate purchases include New York’s 111 Eighth Ave., a former industrial warehouse that takes up an entire block in the Chelsea neighborhood, which it acquired for $1.8 billion in 2010. In July, the company bought a San Francisco office building and agreed to lease space at a nearby tower.