Apple pays $138 million for 43-acre building plot in San Jose tech corridor

Posted:
in General Discussion edited August 2015
Apple's seemingly insatiable appetite for Silicon Valley office space has reportedly led the company to acquire an undeveloped 43-acre site in San Jose, a deal worth $138 million that could add as much as 2.8 million square feet of space to Apple's inventory.


A rendering of the campus Lowe was planning to build before selling the site to Apple. | Via Design For Walkability


The San Jose site is located on North First Street, according to the Silicon Valley Business Journal, within shouting distance of fellow tech giants like Cisco and Samsung. Apple purchased the tract from real estate investment firm Lowe Enterprises, which had previously intended to develop the site into an "urban-style" campus with nearly 2 million square feet of office space.

San Jose planners have approved the building of up to 2.8 million square feet of office space on the site, and it remains unclear exactly what direction Apple intends to take. The latter figure would put Apple's potential new development on par with its spaceship campus in Cupertino when it comes to floor space.

Apple has been rumored to be mulling an expansion to San Jose for some time, given the city's proximity to Cupertino and the fact that a significant portion of Apple's workforce already lives in San Jose. Apple's new site is situated across from the 101 Tech development, where the company signed a lease for 300,000 square feet last month.

In addition to the office space, the Journal reports that "Apple has been in the market for broad swaths of heavy R&D and industrial space," suggesting that the company is working on a major expansion of its research and development operations that are thought to include a self-driving car. Apple's new spaceship campus will come with 600,000 square feet of dedicated R&D space.
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Comments

  • Reply 1 of 32
    solipsismysolipsismy Posts: 5,099member
    sog35 wrote: »
    C
    A
    R

    That was my first thought when I saw the size would be on par with Campus 2 and would fit perfectly for a factory in many regards, just please don't trick yourself into making your first thought into some absolute truth despite this only being a weak hypothesis.
  • Reply 2 of 32
    rogifanrogifan Posts: 10,669member
    Apple is gobbling up all this real estate but the stock is being priced at zero earnings growth. I'm in it for the long term but I think that's nuts.
  • Reply 3 of 32
    mstonemstone Posts: 11,510member
    Quote:

    Originally Posted by SolipsismY View Post





    That was my first thought when I saw the size would be on par with Campus 2 and would fit perfectly for a factory in many regards.

     

    Wouldn't they want to build a factory someplace in the midwest or the south where the workers' salaries are lower and also non-union. Tesla is the only automaker that is not in those southern and midwest states.

     

    https://en.wikipedia.org/wiki/List_of_automotive_assembly_plants_in_the_United_States

  • Reply 4 of 32
    solipsismysolipsismy Posts: 5,099member
    mstone wrote: »
    Wouldn't they want to build a factory someplace in the midwest or the south where the workers' salaries are lower and also non-union. Tesla is the only automaker that is not in those southern and midwest states.

    https://en.wikipedia.org/wiki/List_of_automotive_assembly_plants_in_the_United_States

    That thought did cross my mind, but then I thought of Tesla. as well as, the proximity to Cupertino, how a modern car may be more CE than anything else, and the potentially long number of years it may take to bring it to market. If it is for a car, it may not be so much for a car producing factory, so much as a car design, production, and indoor test facility in which they can control the privacy and environment as they test this for many years.

    The automobile was the first thing that came to mind but I'm open to other suggestions.
  • Reply 5 of 32
    jm6032jm6032 Posts: 147member
    Quote:

    Originally Posted by SolipsismY View Post





    ...If it is for a car, it may not be so much for a car producing factory...

    The thought that came to my mind is final assembly. The bodies may be assembled in heavy factories elsewhere and transported to a smaller facility, such as this, for installation of the electronics and controls.

     

    Also, a very large number of the customers may be in California. Thus, the cars would end up being shipped there anyway.

     

    Just thinking...

  • Reply 6 of 32
    jungmarkjungmark Posts: 6,680member
    C'mon guys. It's for a star destroyer or Death Star shaped office building.
  • Reply 7 of 32
    solipsismysolipsismy Posts: 5,099member
    jm6032 wrote: »
    Also, a very large number of the customers may be in California.

    That sentence made me think of something. If this is for an autonomous vehicle then there will be unique state laws for the sale and use of such vehicles. Perhaps even country and city laws. That along may be why Silicon Valley and California are the ideal places to start such an endeavour.
  • Reply 8 of 32
    solipsismysolipsismy Posts: 5,099member
    sog35 wrote: »
    I can't imagine what else this could be besides a car R&D campus.

    Neither can I, but our inability to imagine is not an indicator that nothing else is conceivable .
  • Reply 9 of 32
    mstonemstone Posts: 11,510member
    Quote:

    Originally Posted by jm6032 View Post

     

    The thought that came to my mind is final assembly. The bodies may be assembled in heavy factories elsewhere and transported to a smaller facility, such as this, for installation of the electronics and controls.

     

    Also, a very large number of the customers may be in California. Thus, the cars would end up being shipped there anyway.

     

    Just thinking...




    It really depends on the scale they plan to launch with. Tesla made only 75,000 vehicles in 3 years and they are very expensive. I would expect Apple to have a much higher volume and be much more affordable so their customers would likely be all over the US not so California-centric like Tesla. Perhaps a comparison to Lexus. 350,000 units per year in the US, at around  $35K -$45K price range would be the sweet spot.

  • Reply 10 of 32
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
    I can't imagine what else this could be besides a car R&D campus.

    Can't believe how dumb Wall Street is.  If I had more money I would have bought more stock at $118.  Those Wall Street clowns who sold at $118 and $117 today probably bought the stock at $130 a weeks ago. And those same clowns will buy the shares again when it hits all time highs in a few weeks/months.  No wonder index funds beat 90% of the mutal and hedge funds.

    That clown Gene Munster was just on CNBC and he said the stock is down because of concerned that the Watch isn't selling and thus giving the impression Apple doesn't know how to create new hit products anymore. I said on Friday that stupid WSJ story would tank the stock on Monday and it appears it did. Anything Apple does now has to be a blockbuster massive hit from day one or it gets labeled a flop and the stock tanks. The last time Apple went below its 200 day moving average was 2012 and the stock dropped another 30% after that.
  • Reply 11 of 32
    mstonemstone Posts: 11,510member
    Quote:

    Originally Posted by sog35 View Post

     

     

    Apple's factor will be totally different from what we see in the midwest.

     

    It will mostly be made by robots and have a small staff taking care of the robots.




    You mean exactly like every other auto factory?

  • Reply 12 of 32
    cpsrocpsro Posts: 2,452member

    Cars? In San Jose? (Farms? In Berkeley?) That would be quite a trick if Apple could build cars in office space.

  • Reply 13 of 32
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
    Gene Munster is a piece of shit.  He's a bear in bull clothing.  He has a positive target but always loves to plant barbs in the media.

    In 2012/2013 Apple tanked because their earnings growth went to negative.  I doubt we see that any time soon.  Apple has already guided to 20% revenue growth next quarter.

    Nothing would surprise me at this point. Right before earnings analyst chatter pushed iPhone 'whisper' numbers to 50-53M which Apple obviously didn't beat. Why were they pushing the number up right before earnings? If they can just make shit up and hold Apple accountable for it who knows what else they'll come up with to drive the stock down. The holiday quarter is going to be brutal.
  • Reply 14 of 32
    mstonemstone Posts: 11,510member

    Tesla has a 370 acre site. Volkswagen in Chattanooga has 6,000 acre parcel of which they are using 1,400 acres to produce 150,000 cars per year. A 38 acre plot is not going to get it done for auto manufacturing.

  • Reply 15 of 32
    rogifanrogifan Posts: 10,669member
    mstone wrote: »
    Tesla has a 370 acre site. Volkswagen in Chattanooga has 6,000 acre parcel of which they are using 1,400 acres to produce 150,000 cars per year. A 38 acre plot is not going to get it done for auto manufacturing.

    What if this is just for R&D and prototyping. I'm skeptical Apple will get into the manufacturing business.
  • Reply 16 of 32
    mstonemstone Posts: 11,510member
    Quote:

    Originally Posted by Rogifan View Post





    What if this is just for R&D and prototyping. I'm skeptical Apple will get into the manufacturing business.



    Yeah me too. I wonder which current automaker would manufacture Apple cars. I think all the high quality ones would refuse. How about Hyundai or Kia so the Koreans can steal all their IP. 

  • Reply 17 of 32
    paulmjohnsonpaulmjohnson Posts: 1,380member
    Quote:

    Originally Posted by SolipsismY View Post





    That thought did cross my mind, but then I thought of Tesla. as well as, the proximity to Cupertino, how a modern car may be more CE than anything else, and the potentially long number of years it may take to bring it to market. If it is for a car, it may not be so much for a car producing factory, so much as a car design, production, and indoor test facility in which they can control the privacy and environment as they test this for many years.



    The automobile was the first thing that came to mind but I'm open to other suggestions.



    I think Tesla only manufacture cars in California because there was a car factory that had just been shutdown available.  They effectively got it for a song.

     

    Deciding to build a new car factory in California generally, and the Bay Area specifically, would be nuts.

  • Reply 18 of 32
    solipsismysolipsismy Posts: 5,099member

    I think Tesla only manufacture cars in California because there was a car factory that had just been shutdown available.  They effectively got it for a song.

    Deciding to build a new car factory in California generally, and the Bay Area specifically, would be nuts.

    We're talking about a project that will likely require years before going full tilt (and that's without considering this to be for autonomous vehicles) so why would they, say, build in the mid-West for something that will have production just be a small part of the project? Think of Apple builds all their current HW: In-house, and then only when it's ready for release does it get built in China for release. Why wouldn't they want to design, build and test this close to home?
  • Reply 19 of 32
    paulmjohnsonpaulmjohnson Posts: 1,380member
    Quote:

    Originally Posted by SolipsismY View Post





    We're talking about a project that will likely require years before going full tilt (and that's without considering this to be for autonomous vehicles) so why would they, say, build in the mid-West for something that will have production just be a small part of the project? Think of Apple builds all their current HW: In-house, and then only when it's ready for release does it get built in China for release. Why wouldn't they want to design, build and test this close to home?



    I totally get your point, but at the same time, for a company so secretive, it would seem weird to do the testing in such a visible location, and it's also not an especially large test site.  The Tesla test track is clearly visible as you drive past it - it's big!

     

    While Apple have bought a lot of land there, it's not that big even for a car R&D facility.

  • Reply 20 of 32
    solipsismysolipsismy Posts: 5,099member

    I totally get your point, but at the same time, for a company so secretive, it would seem weird to do the testing in such a visible location, and it's also not an especially large test site.  The Tesla test track is clearly visible as you drive past it - it's big!

    While Apple have bought a lot of land there, it's not that big even for a car R&D facility.

    I'm certainly not sold on it being for a car, but I don't think it can be ruled out for an early stage. I am also assuming that such a facility would not be visible because it's enclosed.
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