Fortinet collects Sunnyvale sites for big expansion of its headquarters

SUNNYVALE — With little fanfare, Fortinet has begun to collect numerous small buildings in the area of its existing head offices in Sunnyvale, a real estate endeavor that is poised to help the tech company expand its headquarters.

In 2012, Fortinet paid about $25 million for its current headquarters at 899 Kifer Road in Sunnyvale. But that was just the beginning of the network security software and services company’s property purchase activity, which now totals $64 million in Sunnyvale.

From 2015 through May 8 of this year, Fortinet spent $38.7 million to buy several low-slung, older buildings adjacent to its head offices, according to Santa Clara County property records.

SJM-L-FORTINET-0516-90Sunnyvale-based Fortinet’s realty assembly is a reminder that it’s not just behemoths such as Cupertino-based Apple, Mountain View-based Google and Menlo Park-based Facebook that are undertaking a slew of property purchases.

Smaller tech companies may also find it necessary to craft property deals to ensure they have room for expansion in Silicon Valley, where tech giants hunger for seemingly every available large building or big development site.

“It’s interesting and encouraging that a smaller company without the huge financial resources of Google, Apple and Facebook is choosing to spend its money to expand in Silicon Valley rather than to leave the area,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.

The Fortinet activity clears the way for construction of a new headquarters complex, according to a company filing with the Securities and Exchange Commission.

“We have expanded our office real estate holdings to meet our projected growing need for office space,” Fortinet said in an SEC filing. “We purchased office buildings in Ottawa and Burnaby, Canada in 2017, and we have purchased various small buildings adjacent to our Sunnyvale headquarters as we expand our headquarters in Sunnyvale.”

At present, Fortinet’s headquarters are in a 162,000-square-foot building at 899 Kifer Road, an SEC filing shows. The building sits on a 10-acre parcel, Santa Clara County property documents show.

Fortinet intends to develop a 173,000-square-foot building and to retain the existing headquarters structure, according to a company filing with Sunnyvale’s city planners. The new building would rise four stories. The existing headquarters building could accommodate 800 employees, based on typical ratios of space and employees. The new building could contain 865 workers.

“Construction on the new headquarters building is expected to start in the second half of 2018,” Fortinet stated in the SEC filing. “We estimate 2018 spending for this project to be approximately $20 million to $30 million.”

Fortinet didn’t disclose the total cost of the headquarters construction effort in the SEC documents.

“I don’t have additional comment besides what’s been referenced in our regulatory filings,” said Sandra Wheatley Smerdon, a Fortinet spokeswoman.

Fortinet’s workforce totaled roughly 5,100 at the end of 2017, up about 9 percent from 4,700 at the end of 2016, the SEC filing disclosed. During 2017, Fortinet earned $31.4 million on revenue of $1.49 billion.

The buildings that would be bulldozed for the Fortinet headquarters expansion would are typical of the region’s structures of a generation ago, small one-story buildings on very large parking lots.

“We are seeing a transforming and repurposing of old-style Silicon Valley research parks for a more urban and dense use,” Levy said. “Land is what’s valuable here.


Source: mercurynews
Fortinet collects Sunnyvale sites for big expansion of its headquarters