Google Inc. (GOOG:US) agreed to rent a former shopping mall in Mountain View, California, in the largest Silicon Valley lease deal of the year, according to the property’s owners.
The former mall is being renovated into an office complex, with completion scheduled for next year, real estate investment firm Rockwood Capital LLC said today in a statement. Rockwood, which has offices in San Francisco and White Plains, New York, owns the former Mayfield Mall in a venture with San Francisco-based Four Corners Properties. Once the renovation is completed, the campus will have more than 500,000 square feet (46,500 square meters) of office space on 27.6 acres (11.2 hectares).
Office leasing by technology firms is picking up in Silicon Valley after a slowdown at the beginning of 2013 following three years of expansion by companies including Google and Apple Inc. The largest Silicon Valley office lease in the first half of the year was InvenSense Inc. (INVN:US)’s lease of 129,795 square feet in San Jose, according to brokerage CBRE Group Inc.
“Growth has accelerated substantially so far in the second half of the year,” Colin Yasukochi, director of research and analysis at CBRE in San Francisco, said today in an interview. “Additional demand has entered the marketplace, the vast majority driven by tech companies.”
Rockwood didn’t disclose the lease terms, and Caroline Luz, a spokeswoman for the company with Owen Blicksilver Public Relations, declined to comment beyond the statement. Katelin Jabbari, a spokeswoman for Mountain View-based Google, declined to comment on the lease.
Mayfield Mall was the first air-conditioned, enclosed shopping mall in Northern California and was previously occupied by stores including J.C. Penney Co. The property, adjacent to the San Antonio Caltrain station, is in an area with shops, restaurants, housing and a planned hotel, Rockwood said.
Google, owner of the world’s most popular Internet search engine, agreed in July to expand its San Francisco office space at Morgan Stanley’s Hills Plaza building in what would be that city’s biggest lease transaction of 2013, a person with direct knowledge of the deal said at the time.
Google joins Rackspace Hosting Inc. (RAX:US) in using a former shopping mall for office space. Rackspace, a provider of Web-based computing services, paid $32.7 million for the abandoned, 1.2 million-square-foot Windsor Park Mall in San Antonio and converted it to offices.
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