Apple (AAPL) has struck a deal to lease a large office building in downtown Sunnyvale, the latest in a string of agreements expected to bring about 1,700 employees of the consumer electronics titan to that city.
Bolstered by a remarkable surge in sales and profits, Apple has expanded so much lately that the company’s home base of Cupertino is virtually out of large blocks of office space that Apple could occupy.
“Apple is busting at the seams, so is Google (GOOG), and so is Facebook,” said Mark Davis, an executive vice president with Cornish & Carey Newmark Knight Frank, a commercial realty brokerage. “It’s like living in Disneyland. It’s incredible to see the growth that is taking place.”
In the latest transaction, Apple rented a 156,000-square-foot office building in Sunnyvale Town Center.
“We are delighted about Apple’s decision,” said John Pilger, a spokesman for Sunnyvale. “Google, Yahoo (YHOO), Juniper Networks, Intuitive Surgical, Nokia, and now Apple are in our tech community in Sunnyvale.”
Apple expects to move into the office building during the July-September quarter this year.
Previously, Apple leased 215,000 square feet in the Sunnyvale Research Center, an office complex across the street from Fry’s Electronics. The company also has leased more than 100,000 square feet on Benecia Avenue from iconic developers Richard Peery and John Arrillaga.
These buildings could accommodate about 1,700 Apple employees, including 860 in the Sunnyvale Research Center, 420 in the Benecia Avenue buildings and at least 400 in the Town Center project.
“We all see the demand for Apple products, the cash they have on hand, the success they are having,” said Sean Toomey, a vice president with Colliers International, a commercial realty firm. “Cupertino doesn’t have a lot of vacancy until Apple’s new campus is ready. Apple is taking the actions they need to position their business for future growth.”
The Apple move to downtown Sunnyvale bolsters a project that’s a key piece of the city’s downtown mosaic.
“The gain in the daytime business presence of several hundred more people will provide a boost to the city’s economy,” Sunnyvale City Manager Gary Luebbers said. “They will inject more business into downtown and Murphy Avenue restaurants and shops.”
It’s also a welcome turnaround for a Sunnyvale Town Center project that’s been battered by financial woes.
The $750 million project broke ground in 2007. City officials envisioned the development as a traditional downtown. The original developers of the site included 300 housing units, 315,000 square feet of offices, a 200-room hotel, 1 million square feet of retail space and a movie theater.
But the developers soon defaulted on a $108 million loan for the project, which was seized in 2011 through a foreclosure. The development became entangled in a protracted legal dispute. Although the residences were built, they have yet to be occupied.
Despite the financial quagmire, Sunnyvale Town Center has managed some successes.
In 2009, a new Target store became a retail co-anchor, along with Macy’s. In 2010, Nokia leased an office building and moved 500 employees next to the office building Apple has taken.
“Yes, Sunnyvale Town Center is taking longer than we would have liked, but work is progressing,” Pilger said. “The Apple deal is a strong signal that Town Center is viable.”
Contact George Avalos at 925-977-8477.
