Commercial Real Estate Blog

Microsoft has launched a $45B unsolicited bid for Yahoo! Combined, the two would be a more formidable competitor to Google, both in terms of search market share, as well as ad inventory. What will be interesting to see is that if the acquisition is indeed successful, to what extend Microsoft will embrace open-source technologies and how it integrates the two companies.

From a real estate perspective, in Silicon Valley, Microsoft may elect to keep things seperate but also has the option of utilizing Yahoo!’s 50-acre campus site in Santa Clara it purchased two years ago to combine operations. Yahoo! is currently leasing most of its Santa Clara facilities on leases which expire roughly 2-3 years from now. Given the current job cuts and overall woes with the company however, it is unlikely that they would break ground on a new campus anytime soon. Microsoft recently renegotiated for a longer term on its 450,000 SF Mountain View campus.

Also today, Kara Swisher revealed financials from Facebook based on a company-wide conference call held by Mark Zuckerberg. Some numbers are below:

• 2007 Revenues: $150 million
• 2008 Revenues: $300 to $350 million (projected)
• 2007 Headcount: 450
• 2008 Headcount: 1,000 (projected)
• 2008 Capital Expenditures: $200 million (i.e., servers)
• 2008 EBITDA: $50 million
• 2008 Cash Flow (EBITDA - CapEx): negative 150 million.

Based on the above, it would indicate that Facebook will likely be out in the market very soon looking for at least 100,000 SF of space. They are also hiring an executive chef which implies that they are emulating Google in many regards and it will likely push their requirement north of 100,000 into the 200,000-250,000 SF territory to accomodate growth simply beyond the 2008 mark.

Most of Silicon Valley has been unscathed by the sub-prime mess with bank-owned homes being a fairly uncommon site (with the exception of East San Jose). Lately however we have been finding more and more bank owned properties in more exclusive neighborhoods. For the past several years finding a bank-owned property in Los Gatos, Saratoga, Palo Alto, or San Francisco would have been very rare. While the number of properties coming on the market that are REO in these markets still remains low, we have noticed a few cracks begin to show in these high end markets.

What we have also noticed is that there is a fair number of NoD (notice of defaults) occurring in some of these higher end markets as well. The numbers are still insignificant in these particular markets to have any material impact as the market remains hot enough to allow people in trouble to get out safely, it is something to keep a close eye on as some good opportunities might be arising very soon.

Some of the sites for the lenders which they list their REO properties on include:

Bank of America REO

Countrywide REO

Wells Fargo REO

A 112,000 square foot office building currently leased to WSGR (Wilson, Sonsini, Goodrich & Rosati) has been picked up by Shorenstein. The purchase price comes in at a whopping $85M representing a price tag of $750+ per square foot! The building was built in 1998 and is a single-tenant leased investment.

$85M is a monster number and is predicated amongst other things on the strength of the rental market within Stanford Research Park and it’s A+ location. Nonetheless, that is a big number.

San Carlos Office Space
999 Skyway Road - 6,000 SF - Plug N’ Play - $3.25 Full-Service

Palo Alto Office Space
2300 Geng Road - 1,963 SF - Plug N’ Play - $2.50 Full-Service

5,666 Square Feet
2370 Watson Court
Palo Alto, California

• Plug N’ Play - Fully Furnished
• Easy 101 Access
• Perimeter Offices
• $3.00 Full Service

Menlo Park Office Space - 70,000 SF Class A -$1.75 NNN - Plug N’ Play

Mountain View Office Space - 440,000 SF Class A - Corporate Campus Opportunity

Palo Alto Office Space - 6,800 - 10,300 SF Class A - Downtown Location - Awesome Space

Palo Alto Office Space - 11,000 SF - Downtown Location - Plug N’ Play

San Jose Office Space - 3,000 SF - Class A Office Space - Plug N’ Play

Sunnyvale Office Space - 5,000 SF - Class B R&D - $1.50 NNN