Some experts worry that the ambitious building projects underway by companies like Google (GOOG), Facebook and Apple (AAPL) could cause them to vacate hundreds of thousands of square feet of their current offices, turning the commercial real estate boom into a bust.
But while the companies are tight-lipped about their moves, realty experts say most of the new projects represent expansions rather than relocations.
Facebook is renovating and moving by stages into a 1 million-square-foot Menlo Park campus once occupied by Sun Microsystems. It also has bulldozed two old buildings that will make way for a 434,000-square-foot west campus on a 22-acre Menlo Park site.
The social networking firm is leaving behind 400,000 square feet of offices in Palo Alto. But one of those two buildings will be knocked down by owner Stanford University to be replaced by residences. And the other Palo Alto building is expected to soon be leased. The net result: a Facebook expansion totaling 1.4 million square feet.
Mountain View-based Google has been leasing buildings in Sunnyvale, working with NASA on a huge Mountain View campus, and is renting big buildings in Palo Alto and Mountain View.
"Google probably will not be giving up any space," said Brad Lyman, a Cornish & Carey senior vice president. "They are always expanding. Always gobbling up more space."
Cupertino-based Apple is pushing ahead with plans for a "spaceship" headquarters in Cupertino. That raises questions about the permanence of recent leases in Sunnyvale and Santa Clara. Industry watchers say most of the leases appear to be long-term -- but Apple also has escape clauses in some rental agreements.
"There is no real pattern with Apple," Lyman said.
Builders appear to have hedged their bets on these new projects, even when they are poised to break ground immediately.
"Unless they get a signed lease, the buildings might not come out of the ground right away," said Gregg von Thaden, a Colliers senior vice president.
Yet even without tenants, developer Menlo Equities has erected the shells of three office buildings totaling 460,000 square feet at 3333 Scott Blvd. in Santa Clara, said von Thaden, who is marketing the project.
"We're getting a lot of interest," he added. "Activity is good."
Chad Leiker, a vice president with realty firm Kidder Mathews, said there probably will be excess construction and that some developers will be left holding empty buildings.
"But developers are in the business of risk," he said. "And right now it's all good in Silicon Valley."
Contact George Avalos at 408-859-5167 or 408-373-3556. Follow him at Twitter.com/georgeavalos.