Facebook expansion takes over California

Since Facebook arrived in Menlo Park, California, seven years ago, the town has been overrun by construction cranes, orange safety cones and truckloads of building materials to transform a former industrial area into a sprawling campus that can support a $500 billion tech giant.

So big are the ambitions that the company plans to redevelop whole swaths of the land it holds in the Silicon Valley city, potentially doubling its workforce there over the next decade to 35,000 people – more than Menlo Park’s current population.

Even that would not be enough for its expansion plans.

“We continue to grow,” John Tenanes, the company’s head of facilities, said in a conference room overlooking a salt marsh in Facebook’s newest Menlo Park office, a Frank Gehry-designed building called MPK 21 that opened last week. “We’re at a point where we needed more space, and this area couldn’t keep up.”

For all the turmoil surrounding Facebook and investor concerns about a slowdown, the company’s gone on a real estate binge that suggests that its optimism about its future knows no limits. Menlo Park is just the start. In the past year alone, the company has signed agreements that could vastly expand its footprint in the San Francisco Bay Area. It has been one of the most active leasers in the region’s already hot office market.

Facebook is “either giving employees a ton of personal space, or they’re looking for future hires,” said Katerina Cheok, a market analyst at CoStar Group, a real estate data company. “They don’t do small, apparently.”

Aside from simply needing more space, Facebook’s real estate deals are partly a response to the challenge of attracting the most in-demand workers in an area known for punishing commutes and soaring housing costs. The company is expanding its geography by pushing deeper into Silicon Valle and entering San Francisco for the first time by fully leasing two brand-new towers that will have room for thousands of workers in coming years.

The confidence suggested by such moves stands in contrast to the drubbing Facebook’s reputation has taken this year.

For investors, the bigger concern is that sales growth for the company’s core profit driver – the advertising that runs in the news feed – is slowing. A revenue warning, along with another about narrowing margins, sent the company’s shares plunging almost 20 per cent after its last earnings report in July, for the biggest oneday loss of value in stock market history.