Google Inc. is buying a 400,000-square-foot office park in Mountain View in its largest Silicon Valley real estate acquisition this year, and sources say the price could set a record in the region.
The search-advertising giant is reportedly paying a stunning $250 million, or $625 per square foot, for the 24-acre project at 700 E. Middlefield, according to three industry sources not directly connected to the deal, which has not yet closed. That would make it among the highest-value recent Silicon Valley deals on a square-foot basis. In fact, it could be a record for older, 1980s-era product outside of Palo Alto, one broker told me.
Google's ravenous appetite for space has been perhaps the biggest storyline in Silicon Valley commercial real estate, and the pending deal shows that the company isn't ready to slow down. In the past 24 months, Google has paid $331 million for 11 properties in the region, according to Real Capital Analytics. That makes Google the No. 1 buyer in the region, measured by both number of properties and total price, RCA statistics show.
"They're very aggressive in terms of growth, and they're not really pressured by profitability because, the way they're structured, the stockholders really have no vote," said longtime tech analyst Rob Enderle of the Enderle Group. "For the near-term, they're likely to keep expanding."
The company now controls vast swaths of land from Palo Alto to Mountain View and into Sunnyvale, mostly concentrated north of Highway 101. Its portfolio will soon include Moffett Federal Airfield, which Google intends to lease from the government.
"I don't think there's anything like this that's ever been done, and with the magnitude," the developer, landlord and investor Carl Berg, who himself is no stranger to Silicon Valley megadeals, told me when I spoke with him earlier this week.
The four-building Middlefield campus that Google is buying was built in the 1980s and is currently home toSynopsys Inc., but the electronic design automation company is moving across the street to a new office complex next year.
Property owner Deutsche Asset and Wealth Management (formerly known as Rreef) and Sares Regis Group of Northern California have been working since 2012 to redevelop the site into a modern, 1 million-square-foot campus. They have not yet received city approvals.
It's unclear whether Google will continue trying to redevelop the site or occupy it as-is, but Google is already working with Sares Regis on another ground-up project: A 1.1 million-square-foot campus, dubbed Bay View, on land it leases from NASA at Moffett Federal Airfield. That project is currently being redesigned, though basic site work is continuing.
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