Dive Brief:
- The San Jose, CA, city council has unanimously approved a 15-year development agreement with Apple to build up to 4.15 million square feet of industrial, office and R&D space on an 86-acre site in the northern part of the city, the Silicon Valley Business Journal reported. Once fully built, the site could accommodate up to 16,000 workers.
- San Jose officials said they expect $15 million in annual property taxes from a completed project on the site. Apple is "grandfathered" into the lower impact fees specified in the city's agreement with the previous site developer, BEA Systems, for future buildings as well as the two existing buildings already on the property, which could save millions for the company.
- The deal with Apple is a win for San Jose, which has been trying to lure the tech giant there since the 1980s, according to the Business Journal. Officials said 2015 saw "the most successful year for the economic development team in San Jose history" with a wave of other tech companies establishing their presence in San Jose, including Google, Broadcom, Samsung and Splunk.
Dive Insight:
Apple still has not revealed any details about what it’s planning to build on the site, but city officials called the deal a "game-changer" for San Jose.
And for the first time, an Apple representative made a comment on the transaction. "The opportunity to purchase this site came very quickly to Apple," Kristina Raspe, Apple's senior director of real estate and development, said at the council meeting. "It was something we jumped on without a firm plan. We're still studying the site to determine the best use for us. At this point, it looks like it will be office and R&D."
Since Raspe indicated there would be R&D space on the property, the company might not hit maximum worker capacity, as that type of space typically uses fewer workers per square foot than office space.
The question remains of what Apple plans to do with the San Jose site. After sources at the California Department of Motor Vehicles said they had a meeting with Apple in August about autonomous vehicle regulations, rumors flew that Apple was shopping a site where it could work on its "Project Titan" self-driving car. Onlookers are wondering if that’s what the company will do with the newly approved development.
25% of Apple employees live in the San Jose area, but until more details emerge, it’s unknown how many of them will be reporting to duty closer to home.
Although the San Jose facility could rival the size and capacity of Apple's new "spaceship" headquarters in Cupertino, CA, the company said it has no intentions of changing plans to make San Jose its home base.