Could Microsoft/LinkedIn deal scramble tech real estate plans?

Redmond-based Microsoft Corp.’s blockbuster acquisition of Mountain View’s LinkedIn Corp. will unite two companies with major presences in Silicon Valley, including Mountain View’s North Bayshore. Which brings up an obvious question: What happens with their real estate, development plans and employee count here?

That’s the question city officials, competitors, brokers — and, obviously, workers — are asking themselves following the announcement on Monday of the $26.2 billion deal.

The question about LinkedIn’s continued presence and expansion in Mountain View’s North Bayshore is particularly interesting given that each company has major real estate expansion projects in the works.

At this point, it’s too early to know what the future holds for each company’s presence. But here’s one thing you can count on: Don’t expect a big move up to Redmond for LinkedIn.

“This acquisition will not affect LinkedIn’s or Microsoft’s office location strategies,” a Microsoft spokeswoman emailed in response to my inquiry. “As always, we will continue to regularly evaluate workforce needs, including the location of our work sites and facilities.” (A LinkedIn spokesman said essentially the same thing.)

That would jibe with a Microsoft statement that said LinkedIn will “retain its distinct brand, culture and independence.”

In a letter to employees, Weiner also suggested there would be very few layoffs. “Given our ability to operate independently, little is expected to change: You’ll have the same title, the same manager, and the same role you currently have,” he wrote. “The one exception: For those members of the team whose jobs are entirely focused on maintaining LinkedIn’s status as a publicly traded company, we’ll be helping you find your next play. In terms of everything else, it should be business as usual.”

Still, it’s common for firms to consolidate after an acquisition, said tech analystRob Enderle of the Enderle Group. “Generally with company acquisitions they leave the firm in place for the first several years before making a decision on whether to consolidate,” Enderle said in an email. “…I expect they won’t make any major changes until late 2017 or early 2018 at the soonest, and only if it makes sense in terms of site cost.”

He said he’d expect Microsoft would “avoid like the plague trying to get folks to relocate out of the Valley, as they would likely lose most of the top players in the process.”

City officials said they had not been told anything in regard to corporate real estate plans, which isn’t unusual for a deal that was just announced.

But interest will be high. Redmond-based Microsoft and Mountain View-based LinkedIn are both large employers in Silicon Valley, and both companies have reputations for being involved in their communities. Also, one reason Mountain View elected officials granted the lion’s share of North Bayshore’s available space to LinkedIn was to support “business diversity” in the Google-heavy city.

Microsoft had 1,668 employees in Mountain View in the 2014-2015 fiscal year, according to that city’s annual financial report. Most of them are based at Microsoft’s 515,000-square-foot campus in the North Bayshore. Microsoft workers in the Valley work on products including Xbox, Outlook.com, Skype and Yammer.

Meanwhile, LinkedIn had 1,228 workers in Mountain View, primarily at its leased Stierlin Court campus, also in North Bayshore, which is about 370,000 square feet.

Both companies also have sizable facilities in Sunnyvale. Microsoft leased 240,000 square feet in Sunnyvale in 2011 at Moffett Towers. LinkedIn has a clutch of buildings on North Mary and West Maude, including 605 W. Maude (150,000 square feet), 815 W. Maude (23,000 square feet), 845 W. Maude (to be 40,000 square feet at completion) and 580 N. Mary (125,000 square feet). Information on employee counts in Sunnyvale wasn’t available.

Microsoft and LinkedIn are also working on major ground-up real estate projects in Mountain View’s North Bayshore. Microsoft said in January that it plans to buy its campus (which it currently leases) and redevelop it in phases into a more modern, green-roofed campus of about 650,000 square feet. In May, Microsoft added to its property holdings in Mountain View, buying a 3.5 acre site for $15 million.

LinkedIn is planning what it calls “Shoreline Commons” — a massive headquarters project that would be 1.5 million square feet of office, 93,000 square feet of retail, a theater, athletic club and hotel at the gateway to North Bayshore. (LinkedIn recently signaled it was willing to add housing on the site as well.) LinkedIn is developing that project in partnership with SyWest Development, which owns some of the real estate. (LinkedIn acquired the key parcel in late 2014 for $79 million.) The project is only possible because city leaders favored LinkedIn over Google in the hotly contested “Battle for North Bayshore” ( read more here).

SyWest’s Bill Vierra didn’t return a phone call on Monday.

Separately, LinkedIn signed a lease for 400,000 square feet of office space at the second phase of Merlone Geier’s San Antonio Center, which is now under construction, in Mountain View.

The big speculative question is what happens with Shoreline Commons; its massive size was penciled out before LinkedIn’s stock tumbled badly earlier this year, and some observers were already wondering whether the company would ever need that much space. (If it didn’t, you can bet that Google would be first in line to snap up the space.)

But a LinkedIn spokesman confirmed to me on Monday that development for Shoreline Commons would continue just like normal. (The project’s approval was originally slated to go before the city council in June, but it was recently delayed — before the Microsoft announcement — to a time yet to be determined.)

Still, LinkedIn has shown to be flexible in its real estate plans. It leased 600,000 square feet from Kilroy Realty in 2012, then subleased most of it to Apple in 2014; it also grabbed a 100,000-square-foot sublease in Los Altos from Box only to put that space on the market last year.

From a real estate perspective, LinkedIn has always had to fight to slice of Mountain View or Sunnyvale, and was in several cases blown out of the water in deals by competing offers from Google. In a letter to employees, LinkedIn CEO likened the acquisition to a transformational event for the company that would propel it to the big time.

“Imagine a world where we’re no longer looking up at Tech Titans such as Apple, Google, Microsoft, Amazon, and Facebook, and wondering what it would be like to operate at their extraordinary scale — because we’re one of them,” Weiner wrote.

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