Tech Giants Boosting Real-Estate Value

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Jan 03 2007
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In 1954, a 52-year-old milk-shake machine salesman saw a hamburger stand in San Bernardino, California and envisioned immediately a massive new industry: fast food. Raymond Kroc, the founder of McDonald’s Corporation (NYSE : MCD, quote) revolutionized the American restaurant industry by re-create a new way in production of hamburgers, french-fries and milk shakes.

By developing a sophisticated yet consistent operating and delivery system, he ensure that the french fries customers bought in New York city would be the same as the ones purchased in California, London, Seoul or Kuala Lumpur. By the time Kroc passed away from old age in January 1984 at the age of 81, McDonald almost sell its’ 50-billionth hamburger. But when he was asked what the business of McDonald was, guess what the answer? Nope, it’s not hamburger – its’ real-estate.

Now, it seems companies such as Google is following the history by slowly gobbling up lands and buildings with its’t huge war-chest. Mercury News reported that Google (Nasdaq : GOOG, quote) has bought up real-estates in Mountain View’s Shoreline Technology Park for $319 million. Not to be left out, Apple (Nasdaq : AAPL, quote) announced plans to buy 50 acres in Cupertino for more than $160 million while Yahoo (Nasdaq : YHOO, quote) is working to buy 46 acres in Santa Clara for about $50 million.

While the old saying was you should buy property based on location, Google, Apple and Yahoo are “setting” the market for locations by boosting its’ value. The giant search engine’s acquisitions plus negotiations with the city of Mountain View to build another 310,000 square feet and talks with NASA/Ames Research Center to build a 1-million-square-foot campus at Moffett Field has been dubbed the Google Effect.

Yahoo’s decision to expand from its home base in Sunnyvale by acquiring 50 acres along Tasman Drive for a 2-million-square-foot campus is tightening the market in Santa Clara. Apple’s decision in buying 50 acres is equally drying up the availability in Cupertino.

Although Google, Apple and Yahoo might not have the franchising business model such as McDonalds’ in creating the real-estate-chain value worldwide, the three-musketeers definitely give the value surrounding their property a market-boost as well as squeezing other tenants elsewhere.

# TIP: Stocks and Real-Estate are always the top two best investments known. Remember to spread your investment on these two instruments.

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