They called it “the Building of the Month Club” at Cisco Systems ( http://www.cisco.com) , and it was exactly that.
For 19 consecutive months in 1998-99, Cisco brought yet another new building online in North San Jose. By the time that flurry finished — however momentarily — Cisco had built 35 separate facilities spanning 6.3 million sq. ft. (567,000 sq. m.) at its headquarters complex. All this from a then relative unknown that had great concerns about real estate exit strategies back in 1994, when it relocated its 800 employees to San Jose.
That, in short, is hyper-growth on steroids.
“In this environment, you?ve got to be able to be ahead of the growth,” says Christine Garvey, vice president of Cisco?s Worldwide Real Estate and Workplace Resources Group. “In corporate real estate, you don?t want to be the reason the company can?t open its doors and generate revenues. And they do it so magnificently well.”
So well, in fact, that Cisco remains the Internet Age poster child on a landscape littered with dot.bombs. The company whose systems and switches carry 80 percent of worldwide Internet traffic has watched its stock price skyrocket by 8,000 percent since 1990, while its market cap has soared to some US$560 billion, trailing only General Electric. The work force for 1994?s relative unknown has ballooned to 32,000 employees at 235 locations in 54 countries. And it?s adding 3,000 more employees every quarter.
It?s the kind of growth that corporate dreams are made of — and so are the stiffest real estate challenges.
“With a dynamic growth company like Cisco, you just throw old growth projections out the window,” Garvey says with a laugh and a sigh. “Every time you think you have a five-year supply, it?s filled in a year. So you?ve got to be much more nimble, and you can?t immediately put all your focus on process issues.”
Now, though, those process issues are getting their due in Cisco?s more strategic approach to workplace issues. That strategy is unfolding most sweepingly in South San Jose?s Coyote Valley. There, Cisco is building a $1.3 billion campus for 20,000 new employees in 6.6 million sq. ft. (594,000 sq. m.) of office, R&D and light manufacturing space.
It?s the most massive, controversial expansion Silicon Valley has seen in some time.
Creating the ?New World Workplace?
It?s also the most important workplace project in Cisco?s mercurial history. The Coyote campus marks the broad-screen rollout of the New World Workplace, headed by Manager of Workplace Solutions Chris Ross.
“The New World Workplace,” Ross explains, “is an effort to start tying our business objectives and technology together to provide scalable, productive, cost-effective workplace resources for all of Cisco?s space.”
That?s a commonsensical, systematic notion, but one preempted until now by the need for speed. In Cisco?s headquarters complex, for example, growth pressures dictated that the design for the first facility was simply reiterated time and again.
“Our San Jose space has been very conservative, primarily out of necessity,” Ross adds. “But we?ve put a stake in the ground acknowledging that we need to do a better job of managing. That?s why my group was created — to push the envelope a bit more in providing productive, flexible work space.”
But don?t look for Cisco in Architectural Record. Ostentation would be dunder-headed when you have to build this fast, and with no idea of exactly who?ll occupy the space.
Says Garvey, “Employees have a huge fear of what they call ?creeping elegance,? which goes against our cultural frugality; I mean, everybody here flies economy. So you won?t see us winning major design awards. We like to build utilitarian buildings, not monuments to ourselves.”
Nonetheless, high expectations ride on the Coyote project. The San Jose Mercury News, for example, editorialized, “Cisco promises an innovative design for its Coyote Valley Research Park that can set a standard for others to follow.”
Planning a Small Town
The design for the 688-acre (275.2-ha.) site tackles not only workplace concerns, but also environmental, land-use and transit issues.
“We?re using town-planning principles to foster a sense of community,” says Ellen Jamason, director of worldwide real estate. Those principles are reflected in a master plan that divides the campus into “neighborhoods” designated as “agrarian,” “executive” and “urban.”
The town-planning concept, Cisco officials say, is designed to make the project “of the Valley, not in the Valley.” Facilities in the agrarian neighborhoods, for example, will use “a rougher, more natural finish,” says Jamason. The agrarian edge of the campus will also include orchards, vineyards, ponds, oaks and natural grasses.
A campus mockup — which would easily accommodate a poker-playing party of four — resembles a huge college campus. Facilitating that roomy feel are the 90 acres (36 ha.) of the site dedicated to landscaping and open space, including paths for bicycles and pedestrians. Another 269 acres (107.6 ha.) are reserved for regional flood control and open-space retention. “Compared to our North San Jose space, the Coyote campus is much more conducive to human scale, so people don?t feel overwhelmed,” says Garvey.
For Cisco, though, Coyote?s most important space is inside.
“Collaboration and teamwork are key Cisco values, so new space like Coyote is less focused on individuals and more on the team,” says Ross. Unlike Cisco?s existing San Jose space, the new iteration pulls inward to building cores that contain break rooms, mailrooms, copy rooms and bathrooms. Similarly, the “Main Street” at the center of the Coyote campus will house human relations, training, travel and the conference center.
“Our new configurations draw everyone to the center,” Ross explains. “We?re trying to convey the idea that it?s no longer just about people doing all their work in one space. It?s about collaboration. The paths between the Coyote buildings are designed to promote that same sort of ?collision space.? ”
The “outside-in” configuration is already being installed in existing Cisco locations. Thus far, 80 have been retrofitted.
Wanted: 20,000 Workers
But where will Cisco get 20,000 new employees from a renowned but extremely tight labor market?
Cisco has sweated those details down to dot-plotted maps. Coyote workers, it says, will come primarily from already employed locals and from Cisco?s dizzying array of acquisitions.
The company has also thoroughly analyzed transportation concerns. Its environmental assessment report projects that 80 percent of Coyote employees will live north of the site, reverse commuting against the heaviest traffic flow. The site will also have uncommonly strong mass-transit links.
“One of the most terrific features is that the site will have dual train service, a great help in recruitment and retention,” says Garvey. “We?ll have a Caltrain station immediately on the first part of the campus, with light rail connecting to the other side about three years later. Whenever possible, we find public transportation links for all new campuses. And Cisco subsidizes employee commuting by alternative transportation.”
But not everyone buys Cisco?s analyses. A Mercury News study concluded, “The 80 percent figure [for employees living to the north], while possible, may be too high.” It also opined, “New Cisco employees will be moving into an already severely deficient housing market,” which could substantially increase housing costs and trigger extremely rapid growth south of the site, the newspaper said.
Many environmental groups also oppose developing the open space. The local Audubon Society, for example, has criticized what it calls Cisco?s “edifice complex.”
A Payoff for Smart Growth?
But all of Coyote Valley?s open acreage would?ve long ago been turned into housing without San Jose?s growth strategy, some observers contend.
“We had to demonstrate the political resolve to not allow Coyote Valley to go to housing,” says Senior Deputy City Manager Darrell Dearborn. “We knew we needed jobs in South San Jose, and we?ve tried to plan growth there so it?s sustainable.”
San Jose?s Coyote growth plan goes all the way back to 1983, when North Coyote was zoned for industrial use. In 1984 San Jose established its “green-line” growth boundary, which protects the city?s fragile hillsides and permanently established South Coyote as a rural greenbelt. Central Coyote was where San Jose?s master development plan envisioned residential development — but only after substantial job growth in North Coyote.
The payoff for that strategy, Cisco?s mega-development, will ease San Jose?s imbalance in jobs and housing. “We?ve been a bedroom community,” says Dearborn. The city has roughly 56,000 more houses than would be needed to accommodate only those who work in the city.
Opines Garvey, “San Jose?s growth strategy has been very progressive, and it?s probably been the most far-sighted local area in accommodating growth for residential housing.”
The financial payoff for that growth strategy is substantial. California?s third-largest city will gain 20,000 new jobs from a company with an $89,000 average salary. The Coyote campus will annually pump $2.8 billion into the local economy, according to a Cisco-commissioned 98-page report. And beginning North Coyote?s development with a major project, not a number of small ones, appreciably reduces the city?s infrastructure investment.