Tuesday, April 25, 2006, 11:15 am PT (02:15 pm ET)
Cost of new Apple campus could top $500MApple Computer chief executive Steve Jobs was most likely speaking plainly when he told the Cupertino City Council last week that Apple ended up spending more than it would have liked to acquire the land for its second headquarters, reports the San Jose Mercury News.
According to the report, the assessed value of the 50 acres Apple is buying tops $160 million. However, by the time Apple razes the site's old-style structures and builds new ones, the iPod maker could easily have spent $500 million, two real estate experts predict.
With such a price tag, the company's second campus — which will be strung together from land acquired via 9 separate properties — could turn into one of the costliest Silicon Valley commercial ventures in recent history.
Of course, Apple could have paid less for the property elsewhere in the Bay Area, the report notes. "But the city where Apple has deep roots held more allure."
Presently, Apple is reported to have employees working in about 30 buildings spread across Cupertino, including some on Bubb Road and De Anza Boulevard. By consolidating on one large campus, the company will save money and headaches in maintenance and security costs, real estate experts say.
But assembling 50 acres of land in Silicon Valley requires more than just deep pockets. If sellers find out a multi-billion-dollar company is hunting for land, they're likely to boost the asking price, notes the Mercury News.
So, as with its new products, Apple was equally secretive about its plans for its second home. The tight-lipped company is reported to have worked with development firm Hines Interests — which recently purchased an 8-acre lot from SummerHill Homes — to secure land for the new campus.
"SummerHill officials were told only at the closing that Hines was working on behalf of Apple." the Mercury News reported. Hewlett-Packard, which also sold three buildings to Apple, has said its part of the deal is expected to close next month.
Most attempts to piece together contiguous land owned by different owners — a practice known as "assemblage'' — are conducted quietly, often with property owners in the dark about who the buyer is, said Philip Mahoney, executive vice presidentwith Cornish & Carey, a Santa Clara commercial real estate told the publication. "I've worked on many assemblages, and the only way they happen is if they are quiet."
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