Facebook officially buys TE Connectivity Campus for $101.6 million

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It’s a done deal: Facebook Inc. is the new owner of roughly 60 acres of land in Menlo Park, where the social-networking company could expand big-time in the coming years.

Facebook paid $101.6 million for the property at 300 Constitution Ave., formerly owned by TE Connectivity, according to public records I reviewed today. TE, with about 600 workers in the region (most in Menlo Park), will remain there for now thanks to a leaseback agreement with Facebook.

The deal, which closed yesterday, was first reported by the Business Journal on June 6, but the price was not available until the deal closed on Thursday. The sprawling campus is just a skip away from Facebook’s current headquarters and includes about 10 buildings totaling roughly 1 million square feet.

Facebook said back in June that it was buying the property for future growth, but that it did not have plans at the moment either to move in or redevelop. The company declined to add to that comment today.

Even if Facebook doesn’t occupy the project for years, expect this deal to add even more momentum to development activity in Menlo Park and this part of the city in particular. Menlo Park — the Valley’s historic venture capital epicenter — is transforming into a more tech-heavy submarket partly thanks to Facebook, as our sister publication, the San Francisco Business Times, reported last week. And now new housing is popping up in Facebook’s neighborhood in a big way, changing the face of the neighborhood.

The land Facebook bought are five parcels and add up to about 59 acres, fronting a prominent stretch of Bayfront Expressway. The price works out to roughly $39.50 per land square foot. That may be the best way to value this deal given that the age and condition of the largely industrial and R&D buildings makes redevelopment the likely path forward eventually.

Sean Toomey, a senior vice president with Colliers International in San Jose who is familiar with the asset, said the deal makes a lot of sense for Facebook and would serve them for years to come.

“Given the proximity to Facebook’s current campus and expansion project, and considering how far off-campus Apple, Google and others have had to search for growth opportunities, this acquisition is a big win for Facebook,” he said, “particularly at this price for a large assemblage in Menlo Park.”

According to a memorandum of lease that I reviewed today, TE has signed a five-year lease-back arrangement with Facebook for a portion of the campus with one three-year option, subject to an early termination clause. It’s unclear how big the portion is, and what the financial terms are.

“We are looking at another site within the Silicon Valley, because that is so important to our company,” TE Connectivity spokeswoman Jane Crawford told me on Friday. “We’re presently evaluating other locations.”

Facebook is already well under construction on a striking, Gehry Partners-designed building next door to the TE Connectivity site. That project, essentially a huge, 430,000-square-foot room topped by a living roof garden, could hold up to 2,800 employees.

Facebook’s existing headquarters is East Campus, which was formerly occupied by Sun Microsystems and includes about 1 million square feet of space. The project is notable for the extensive renovations Facebook and its architect, Gensler, undertook since moving into the project in 2011. The design strategy was to convert the fairly typical suburban office campus into an urban-style project with ground-floor retail and services in a dynamic environment.

Nathan Donato-Weinstein covers commercial real estate and transportation for the Silicon Valley Business Journal.