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Google has purchased over a million square feet in Mountain View year-to-date, in addition to the tens of millions they've acquired in the last 10 years. Additionally, they've leased over 600,000 square feet year-to-date. They've expanded so far into Mountain View that they've actually decided to temporarily stop their growth. They've paused so they can put together a plan for how to manage all the space they've acquired over the years.
While this would seem to be a good sign, there are a few problems caused by this massive expansion. Lease rates have gone up 25% year-over-year. Because of this, Google can come in with deep pockets and scoop up what they want with little competition, taking out other companies with less cash flow and displacing them. However, we have seen large companies expanding into Oakland and Walnut Creek, which is good for those markets.
All in all, what does this expansion mean for the East Bay? For one, we've seen the commercial vacancy rate drop from 14% in 2011, to 11% now. Commercial leasing, however, has jumped a bit - from $30 a square foot in 2011, to $60 a square foot in 2014. With many tech-related companies moving around, we've seen many areas experience growth, including Pleasanton.
What all this means is we could be seeing a lot of companies leave the South Bay and come into the East Bay, which would help fuel job growth in our communities. That would be great news for local housing, as more income for more people always spurs the housing market.
If you want more information on this interesting topic, or have any general real estate questions, give us a call or shoot us an email. We're proud to be your East Bay real estate resource!
