January 23, 2004

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Publication Date: Friday, January 23, 2004

Rediscovering Mountain View

By Jon Wiener

A growing number of Silicon Valley businesses are moving to North Mountain View, gradually filling in the acres of empty office buildings abandoned during the dot-bomb.

In the last six months, over a million square feet of North Mountain View office space has been "retenanted," according to the city's economic development manager Ellis Berns.

Berns has been acting more like a redevelopment commissioner as of late, scrambling to attract businesses to the gleaming office buildings and lab spaces that decorate the city's landscape. To achieve that goal, Berns has streamlined the inspection and permitting processes so companies can move in as quickly as possible.

"We're able to get them in when they to be in," said Berns. "In this kind of environment, you want to retain businesses. These companies have the opportunity to go to any other community."

Mountain View has approximately 60 million square feet of office space. During the peak of Silicon Valley's boom, commercial vacancy rates in the city tended to stay below three percent, sometimes at zero, according to Berns. After the recent mass exodus of companies, Valley businesses are starting to trickle back into the vacant offices.

Over the course of the last year, the city's vacancy rate for commercial real estate has fallen from 28.5 percent to 21.7 percent, according to a report by commercial realtor BT Commercial. That rate is still third-highest in Santa Clara County, trailing only San Jose and Santa Clara.

"We think a lot of it has to do with the quality of space and the location," said Berns, echoing a sales pitch he makes to companies. "Mountain View is strategically located to draw people from San Francisco and San Jose."

Berns also mentioned that the nearby recreational park at Shoreline can be a draw for companies looking to provide their employees with added benefits.

Kevin Perez, vice president of marketing for Omnicell, said the company looked at many other locations before picking a former SGI building next to Moffett Field for its new headquarters.

Perez cited transportation access for Omnicell's 450 employees and the quality of the existing space as reasons for choosing Mountain View.

"We needed space, and we wanted to consolidate manufacturing and headquarters functions. With our larger space, we are able to be in one big facility," Perez said.

Omnicell opened its new building on Jan. 5, only six months after beginning its search.

"It shows well for our customers. It's a beautiful building and also fully functional," Perez said.

In the next few months, Omnicell will be joined on the former SGI campus on Charleston Road by Drexler Technology Corporation. The data storage manufacturer is expanding from its current offices on Independence Avenue and expects to move in March or April. Boston Scientific is building research/development and manufacturing space to house the operations of several Valley companies that it acquired in the last few years. And Google has 500,000 square feet under construction on Amphitheatre Parkway.

The North Bayshore area is not the only place attracting tenants. Intuit is renewing its lease for its corporate headquarters on Marine Way. Mercury Interactive, a Sunnyvale software company, is moving into the AOL campus in the Whisman area to house its 270,000-square-foot North American call center and other operations.

The new businesses will mean thousands of new employees in Mountain View, although that growth will be mostly due to relocation of existing jobs rather than the creation of new ones. In addition to increasing the payroll taxes, Berns hopes the employees will create a multiplier effect, aiding the local economy by patronizing other Mountain View businesses for entertainment, dining and other needs.

When companies fled and commercial property values sunk, residential property values remained high. Berns is optimistic that commercial spaces will continue to attract new tenants and drive commercial property values back up.

According to Berns, any noticeable increase in property values and property tax revenues will take place over an extended period of time. But he believes he is witnessing the start of a trend. As businesses rediscover Mountain View, the office buildings along Shoreline Boulevard and throughout the city will continue to fill up.

"It's pretty exciting given the current climate," said Berns.

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