“There has been a lot of negative banter about tech slowing,” said Hudson Pacific Properties CEO Victor Coleman. In fact, quite the opposite is happening, he said. “Even as certain private companies reign in on expenses, they continue to view the growth of successful business lines and recruiting as paramount, which impacts their space needs positively,” Coleman said.
This time, the growth is being led by big, established players.
Alphabet‘s Google and Apple inked the biggest real estate deals in the second quarter of this year, collectively leasing some 230,000 square feet of additional office space in Silicon Valley, according to real estate firm Newmark Cornish Carey. The two tech giants are already among the largest property owners in the Valley and both added space in Sunnyvale, Calif. which sits in the heart of Silicon Valley adjacent to their sprawling campuses.
“Apple, Google, Facebook and Linkedin continue to expand outside of their respective campuses,” said Christan Basconcillo, Silicon Valley research manager for real estate firm Jones Lang LaSalle. “However, with conditions becoming very tight from an availability standpoint these companies are starting to push into Santa Clara and North San Jose, most notably Google and Apple.”
Landlord asking rates increased in almost every city in Silicon Valley in the second quarter, approaching a $1 per square foot premium over the previous peak of 2007, said Newmark Cornish Carey.
The other biggest deals came from the China-headquartered Cambridge Industries Group — which partners with firms to help with RD and manufacturing — and venture-backed augmented reality rising star Magic Leap. Overseas tech companies are helping to drive momentum, as more and more foreign firms plant flags in the Valley, said Basconcillo.