Deal shows Silicon Valley’s resilience
CUPERTINO >> Apple’s megadeal to purchase several big Cupertino office buildings counters the narrative that the tech industry is fleeing Silicon Valley and helps Apple solidify its Bay Area presence.
The tech titan has paid $450 million to scoop up five office buildings near the interchange of Interstate 280 and North De Anza Boulevard that Apple had been leasing in Cupertino, according to documents filed with the Santa Clara County Recorder’s Office this month as reported by this news organization.
“Regarding companies staying or fleeing this region, the story of Silicon Valley’s demise has been greatly exaggerated,” said Dave Sandlin, an executive vice president with Colliers, a commercial real estate firm.
In some instances, it might make sense for certain companies to shift a portion of their operations out of Silicon Valley. But in most cases, it makes more sense for tech companies to remain in Silicon Valley.
“If you’re looking for toptier tech talent, high growth and cutting-edge technologies, you’re in Silicon Valley,” Sandlin said.
HPE and Oracle are among companies that have revealed plans to shift operations or headquarters to Texas. But these high-profile departures increasingly appear to be the exception and haven’t undermined Silicon Valley’s economy.
“Companies say they move, but they really didn’t move everything,” Sandlin said. “They keep the same number of employees here as before.”
Apple, in its recent transaction, bought the buildings through a trio of transactions with varying prices, the county records show, and paid cash in one of the largest property purchases, by value, so far in 2021 in the South Bay.
“The Apple transaction is a savvy move to use cash to buy buildings they’ll need long term,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy.
The purchases by the iphone maker are a reminder that in many instances, the company would prefer to own rather than rent its local office space.
“Apple has a huge history in Cupertino,” Sandlin said. “When office buildings are up for sale in Cupertino, there is an 80% chance that Apple will take what becomes available.”
The sellers were affiliates controlled by legendary developer Carl Berg, according to the public records.
Among the other largest known property purchases so far in 2021 in Santa Clara County:
• In March, Brookfield Properties paid $630 million for two big office buildings in Mountain View that have been leased to Facebook, a building that includes a 10-screen movie complex and a parking structure.
• In July, KKR paid $535 million for a north San Jose complex of three buildings and a parking structure.
Apple also was involved, as a tenant, in a huge office lease in May, when it leased 701,000 square feet in Sunnyvale’s Pathline Park tech campus, enough office space for 3,000 workers.
And in addition to Apple’s deals this year, Google, Facebook, Adobe and Amazon, through combinations of property purchases, leases and development ventures, have either launched or begun to prepare major expansions in Silicon Valley.
“Sooner or later, the story of Silicon Valley’s demise might become right if housing prices continue to climb and government actions are negative for the tech companies,” Sandlin said.
That day has yet to arrive in Sandlin’s view.
“Right now, Silicon Valley is such a fruitful place for companies,” Sandlin said. “Tech companies still like to steal employees from other companies. You can’t do that in Ohio or most places in the country. There are not a lot of places other than Silicon Valley where tech engineers say they can work for multiple companies within five miles of each other.”