https://www.cnbc.com/2016/01/12/the-cia-backed-start-up-thats-taking-over-palo-alto.html
watch now
Downtown Palo Alto, the heart and soul of Silicon Valley and former home to Google, Facebook and PayPal, is slowly turning into a scene out of “Lord of the Rings.”
Palantir Technologies, a highly secretive software developer whose name is derived from a magical crystal ball in J.R.R. Tolkien’s fantasy novel, has been gobbling up real estate in the upscale home of Stanford University, and — according to critics — uprooting a vibrant start-up ecosystem in the process.
Unlike its start-up predecessors, which outgrew the cramped streets of Palo Alto and moved to more traditional corporate campuses in nearby Menlo Park and Mountain View, Palantir is intent on staying put and expanding. The company controls about 250,000 square feet of office space, or 10 to 15 percent of the commercial inventory, spread over 23 or so buildings. Some of its leases are for a decade or longer.
Palantir’s logo featuring a circle above a wide lower-case v is everywhere. T-shirts sporting the company’s motto “Save the Shire” (referring to the home of the hobbits in Tolkien’s Middle-earth) can be seen in coffee shops, at parks and on treadmills.
“There’s more Palantir paraphernalia in downtown Palo Alto than there is Patagonia,” said Peter Hebert, co-founder of venture firm Lux Capital, which left for Menlo Park late last year because there was nothing available in Palo Alto. “There’s such scarcity that it’s pushing everyone else out.”
Asking rents for commercial space are $121 per square foot annually, more than triple the national average, according to commercial real estate firm Jones Lang LaSalle. Prices have about doubled in the past five years, and according to Jones Lang the vacancy rate sits at 1.5 percent.
Palantir’s rates vary because many of its leases were signed when prices were substantially lower. Not that it’s strapped for cash — the company has raised close to $2 billion and is valued at $20 billion. It also subleases some of the space to smaller start-ups.
Palantir t-shirt.
CNBC
The Palo Alto residential market is equally tight, with the average four-bedroom, two-bath house listing for $2.1 million, making it the second most expensive city in the U.S., according to Coldwell Banker. Palantir CEO Alex Karp lives in the neighborhood.
Meanwhile, fast-growing start-ups are leaving town and younger companies are choosing to set up shop elsewhere. Online financial services provider Wealthfront, unable to find suitable space to grow in Palo Alto, moved five miles north to Redwood City, as did smartwatch maker Pebble.
“Spaces becoming available were requiring 10- to 15-year leases, which for a start-up is a tough nut to swallow,” said Ashley Fieglein Johnson, Wealthfront’s finance chief. In moving to Redwood City, Wealthfront upgraded from a 9,500 square foot office to one more than twice that size.
While emerging companies bid adieu, Amazon.com, through its A9 search division, has become Palantir’s principal competitor for space. The company recently won the bid for SurveyMonkey’s 50,000-square-foot office, about the same size as A9′s headquarters across the street. SurveyMonkey is relocating to a bigger facility in San Mateo.