Google and LinkedIn officials on Tuesday announced a surprise deal for a massive property swap that would trade real estate and development rights, consolidating Google's presence in Mountain View and effectively sending LinkedIn out of North Bayshore and over to the Sunnyvale border.
Both companies characterized the deal as mutually beneficial, allowing them to consolidate property surrounding their respective campuses while streamlining responsibility for a hodgepodge of transportation improvements required by the city.
The deal would involve about 2.5 million square feet of office space between the two tech giants, including sites already built and occupied as well as areas with development rights for future construction.
Perhaps the biggest chip tossed into the pot is LinkedIn's colossal 10-building project, dubbed the "Shoreline Commons," that is slated to occupy the North Bayshore gateway along Shoreline Boulevard. The project will be handed over to Google, which would continue working with the five other landowners collaborating to build a mixed-use campus.
LinkedIn's Shoreline Commons proposal, which got the city's blessing in October, calls for a new hotel, movie theater, shops and restaurants that would create a sort of mini-downtown to serve the thousands of new apartments being planned in North Bayshore.
For now at least, Google officials intend to move forward on the plans for Shoreline Commons, although the development could be tweaked in the coming months, said Mark Golan, Google's vice president of real estate.
"As of now, there's no change. That development is proceeding as it was originally anticipated," he told the Voice. "At the end of the day, this is a positive transaction for LinkedIn, Google and the city itself."
LinkedIn will also hand over to Google the area now used as its global headquarters, a six-building site along Stierlin Court. Those buildings are currently leased by LinkedIn and total about 375,000 square feet of office space. Google would take over the lease as part of the deal.
The deal would result in LinkedIn making a complete exit from Mountain View's North Bayshore while Google continues to increase its presence. But while LinkedIn will need to move 3,700 employees, the company also gains a sizable new foothold just south of Highway 101.
In exchange, LinkedIn is acquiring ownership of seven buildings near East Middlefield Road and Maude Avenue, totaling about 750,000 square feet of office space. The properties add up to about 28 acres along the border of Sunnyvale that would become LinkedIn's new headquarters. LinkedIn already owns about 10 buildings nearby, so the new sites from the trade help create one unified flagship campus for the company, said LinkedIn Vice President Jim Mortgensen.
"This lets us get our employees in a walkable campus by this year," he said. "This is huge; this lets us foster our culture of collaboration, and it gets our research and development teams together so they produce better products."
Both companies hailed the new deal as a mutual win that would bolster their long-term growth; however, their relationship was hardly so amicable about one year ago. At that time, both companies were in a heated contest for a limited pool of office growth being allowed by the city. In a surprise move, Mountain View City Council members awarded LinkedIn the lion's share of development rights, despite pledges from Google to help build housing in the area, with plenty of lucrative public benefits thrown in.
In the background of this complicated property swap is the equally complex problem of traffic congestion in North Bayshore. As part of giving the green light to both companies' proposed developments in the area, Mountain View officials are requiring a variety of transportation improvements, including construction of a new frontage road as well as about $90 million in other other infrastructure projects.
Those transit requirements left both companies stuck in a dilemma. Last year, as LinkedIn brought its Shoreline Commons project forward for review, city officials pointed out that the company couldn't build its project unless Google agreed to contribute a portion of its land for a pedestrian bridge over Highway 101 and a new off-ramp at La Avenida.
Similarly, Google's various proposed developments in the region could conceivably have been obstructed if LinkedIn refused to participate in traffic mitigation.
At the time, LinkedIn officials gave public assurances the situation wouldn't be a problem, but it turns out to have been a bigger concern than was publicly revealed. In fact, both companies had already started discussions over a possible property trade last summer, Mortgensen said.
"For Google, this (property trade) makes perfect sense. More than anything else, it takes the issue of all the transportation infrastructure that the city needs and it leaves it with one party," he said. "Google no longer has to do things that would be for the benefit of LinkedIn. That friction between us really wasn't very good."
For their part, city officials say they have known for months that the two companies were having back-room discussions about a land swap. The new deal resolves a tricky question for the city over how to fairly balance development rights between two companies that would have been forced to cooperate while competing, said Mountain View Community Development Director Randy Tsuda.
"If one company would have installed certain improvements that benefit another company, is that equitable?" Tsuda said. "The conclusion they all came to through their conversations was it's simpler to coordinate if one company was in control and had the major presence in North Bayshore."
But plenty of questions remain over the particulars of the deal. For example, last year, when city officials approved LinkedIn's Shoreline Commons project, the company pledged it would donate $40 million to MidPen Housing to help provide affordable housing in Mountain View. LinkedIn confirmed that it will not be writing that check, and city officials say that responsibility for that approximate sum would likely be shifted to Google as a housing-impact fee for the project. Google officials couldn't respond to the Voice's questions about it.
Also up in the air is the future of a row of North Bayshore small businesses that were to be redeveloped for the Shoreline Commons project. Last week, the owners of Pakistani and Indian restaurant Zareen's announced they are opening a second Palo Alto location, based partly on fears that they would need to close their Plymouth Drive location in Mountain View due to what will now be Google's expansion.
Under the cloud of looming redevelopment, the situation for the area's independent cafes and other eateries has felt half like a "bargaining chip" and half like a "chess piece" in the larger corporate game, said Rob Graham, the owner of the Sports Page Bar and Grill.
He recalled Google throwing a party at his pub when the company's then-modest team of 100 workers launched their initial public offering. He said he remained nervous, but hopeful that the tech giant would consider his business' future with sensitivity.
"I don't know what's going to happen with the land swap. I have no control over that," he said. "But I do have a little bit more confidence. I know the people at Google and maybe they're not so big that they're going to run over me."