Interesting Media Point About Sunnyvale Office Space

A Business Journal article about recent office space acquisitions in Sunnyvale raises a very interesting point that is worth emphasizing.  Less than two years ago, the office vacancy rate in Sunnyvale was at 54% – more than half of all office buildings were vacant.  That percentage has plummeted significantly in the past year, to the point that the Business Journal predicts we will have less than 10% office vacancy in Sunnyvale.  In other words, we’re full up, pretty much.  And we’re getting a lot of developers looking to build more office space as well – we approved two large buildings in Moffett Park and one in Peery Park in just the past six months.

That’s an incredibly impressive accomplishment.  A lot of it is due to the economic turnaround, and the role Sunnyvale plays in the national economy.  Our industry is heavily based on “business to business” companies – a lot of our companies make their money by selling goods to other companies.  Think Juniper, NetApp, Google to an extent, Rambus, Nokia, Broadcom, and even Fry’s and Costco.  So when an economic recovery hits, the first improvements appear in “business to business” companies, because when a business ramps up its hiring and production, it starts by buying lots of equipment from companies in Sunnyvale.

But there’s another reason for this, which is far less obvious.  A number of nearby cities attract businesses by throwing money at them.  San Jose tossed Maxim half a million dollars in RDA money to get them to move from Sunnyvale.  Santa Clara does this, so do others.  But Sunnyvale doesn’t.  We don’t give money or tax breaks to companies as enticements, because we think that’s short-sighted, and it’s not the basis for a good long-term relationship with our businesses.  Instead, we design our whole economic strategy and permitting operations around one basic concept – the City works hard to be a good friend to Sunnyvale businesses.

This starts the moment a company comes to Sunnyvale staff and says “hey, I’m looking for space, can you help?”.  Our staff, led by Economic Development Manager Connie Verceles, knows about all of the vacancies in the city, all of the planned construction, every option available to a company looking for space.  They know about the pluses and minuses of every location, the neighbors, the amenities, the traffic issues, you name it.  And they work hard to help find the best possible match between potential tenants and land owners.  And it doesn’t stop there.  We’ve designed our permitting system so that from start to end, getting any necessary permits is as quick and painless as we can make it.  We want new companies to get up and running as quickly as possible, and our staff works hard to make that possible.

And I think this philosophy is directly responsible for Rambus, Nokia, Apple, Google, and many other companies deciding to expand into or relocate to Sunnyvale in the past couple of years.

I’d love to claim credit for this.  Mostly, this predates me, but our City Manager has really hammered home this philosophy with the hires he’s made and with the processes that we use.  For the most part, Council contributes by simply staying out of staff’s way, and by visiting businesses, learning what worked and didn’t work for businesses, passing back that feedback, and showing businesses that we take their concerns seriously (even if we have to say “no” from time to time).  Staff is pretty good about keeping Council involved at the right moments, and so far, Council has been pretty good about not trying to interfere at the wrong moments.   It’s been a pretty good partnership over the past couple of years.

There’s no doubt that the whole valley is experiencing a resurgence in industry right now.  But if you look around at what’s happening in nearby cities, Sunnyvale is clearly the king of the hill right now.  We’re the place to be.  And that’s not a coincidence.  It’s by design.

Now, hopefully, this resurgence will translate into revenue, so we can start restoring city services that have been cut in recent years.  We’ve got momentum in the downtown as well, so I’m feeling optimistic.  Well, cautiously so.

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