With its ever-growing employee population squeezed in Palo Alto, Facebook may move to its first true corporate campus in Silicon Valley, transferring the headquarters of the world's largest social network -- and tens of millions of dollars in future tax revenue -- to Menlo Park and San Mateo County.
Several sources familiar with Facebook's plans say the company is close to buying the 57-acre former Sun Microsystems campus off Willow Road, which housed about 3,000 Sun employees last year before Oracle bought the struggling computer maker for $7.4 billion. Facebook now has more than 2,000 employees, many of them shoehorned into 150,000 square feet the company leases in Stanford Research Park.
Facebook on Monday declined to confirm the move but acknowledged in a statement that it is exploring a deal for a "long-term location to fit our growing business needs." But workers doing renovations at the former Sun campus said Monday that they were preparing at least one building for Facebook to move into as soon as June.
"They didn't want us to tell anybody that it's Facebook; I don't know why," said an employee with SC Builders of Sunnyvale who asked not to be identified.
Palo Alto officials also said Monday that Facebook has notified them it plans to leave the city, although the city is talking to the company about retaining a presence there.
Menlo Park officials said they had been told to refer media questions to Facebook, which acknowledged in a written statement that its search had narrowed to a single property. "We are in the due diligence phase on one potential site, but it would be premature to offer any specifics," said Facebook spokesman Larry Yu. "We hope to have more to share in the near future once things have been finalized."
Facebook set up operations in Palo Alto in June 2004, about four months after co-founders Mark Zuckerberg, Dustin Moskovitz, Chris Hughes and Eduardo Saverin launched the social network from their Harvard dorm room. Facebook now has more than 500 million users. And with reports Sunday that Goldman Sachs and a Russian investor have agreed to invest $500 million, the social network now has a valuation of $50 billion -- higher than eBay and Yahoo.
Facebook in recent months also showed an interest in buying the 98-acre former Hewlett-Packard campus in Cupertino, a property snapped up by Apple in November, according to a source.
While Facebook leases the buildings it currently occupies on South California Avenue and Page Mill Road in Palo Alto and does not pay extensive real estate taxes to Santa Clara County, the company is growing so rapidly that the business equipment taxes it pays the county on computers, furniture and other equipment are doubling annually, and could top $1 million in 2011, said county Assessor Larry Stone.
"These high-profile, high-tech companies add a lot to the stature of a community," Stone said. "And they do add revenue, over time. Because companies like Google and Facebook are growing so fast, their personal property assessments grow exponentially as time goes on."
Palo Alto officials are more concerned about the loss of a household name than any immediate fiscal impact, said deputy city manager Steve Emslie.
"Losing a cutting-edge company, one that has really grown by leaps and bounds, is very significant to us," he said, adding that the possibility of Facebook retaining a presence in Palo Alto "definitely is on the table."
The former Sun Microsystems campus is one of two campuses that housed Sun's operations in Silicon Valley -- the other is in Santa Clara -- when Oracle bought the struggling computer maker.
Among other things, the campus housed about 200 scientists and engineers associated with Sun Labs, the company's research arm, who worked on the company's Java software and other programming languages. It also boasted two large cafeterias and an "executive briefing center" where the company showed off new products to high-level corporate clients.
The assessed value of the campus's land, buildings, business equipment and fixtures is $228.4 million.
An Oracle spokeswoman declined to comment Monday on the company's plans for either Sun campus. But industry expert Trip Chowdhry said it would make sense for Oracle to sell or lease the Menlo Park property and move Sun's remaining operations to the Santa Clara campus. Chowdhry, an analyst at Global Equities Research, said the Menlo Park offices had been "very lightly used" in recent months.
Located adjacent to the bay near the west end of the Dumbarton Bridge, the Sun campus is somewhat isolated from the restaurants and other amenities that Facebook employees enjoy in Palo Alto. But Chowdhry said that as Facebook continues to grow, the company may find it easier to operate on a single campus rather than being spread among separate buildings in Palo Alto.
The move is part of a natural Silicon Valley cycle, said Chowdhry. As old companies close or move on, "a new generation of companies moves in and takes over."
Palo Alto Daily News staff writer Bonnie Eslinger contributed to this report. Contact Mike Swift at 408-271-3648. Follow him at Twitter.com/swiftstories.
The assessed value of Facebook's computers, furniture and other equipment in Santa Clara County has mushroomed in recent years:
Source: Santa Clara County Assessor