t a time when most firms with a technology focus are retrenching, Pillsbury Winthrop is breaking ground to erect a new Silicon Valley office building.
The firm announced Wednesday that it will consolidate its pair of South Bay offices into a yet-to-be-constructed two-story building in Palo Alto's Stanford Research Park. The move caps a yearlong search by Pillsbury for new office space in the area.
"We're very excited to have made this decision," said Pillsbury Managing Partner Marina Park. "It's a difficult time to make any decisions, but we also think that it's a time to create opportunities and to look ahead and plan for the future."
The new space will house roughly 320 people, with private offices for 160 attorneys, when it's completed in March 2003. While the building will be designed according to Pillsbury's needs, the firm will not actually own the new building. Instead, Pillsbury has signed a 10-year lease for the 82,000-square-foot facility from Stanford University.
The decision to build is somewhat unusual in a time when there's such a surfeit of available office space. According to a preliminary survey from brokerage BT Commercial Real Estate, office vacancy rates in Palo Alto soared in the third quarter to 11.8 percent compared with 3.5 percent a year ago.
"You don't really see a lot of new construction," says Mark Bollozos, director of research for BT Commercial. "That's more the exception rather than the norm."
But Park says the decision to build was based on the strong desire of the firm's employees to remain in the Stanford Research Park, where real estate options are more limited.
The move is also noteworthy as the new building is designed to accommodate twice as many lawyers as Pillsbury's current 82 in Silicon Valley. This comes at a time when a contracting technology sector has taken a toll on several firms.
Just last month, Fenwick & West laid off 32 associates, or 11 percent of its 300-lawyer work force. And Cooley Godward lightened its headcount by about 85 associates a few weeks earlier.
Pillsbury -- which said when it merged with New York-based Winthrop, Stimson, Putnam & Roberts in January that its overhead was 20 percent higher than it would like -- does not plan to beef up on Silicon Valley lawyers in the near future. But the firm is leaving itself plenty of room to grow in anticipation of an eventual rebound in the technology sector.
"My view is this is very fertile ground for the next wave," says Park. "Smart people never stop thinking. When they're given a breather from their day-to-day existence they're not gonna just go out and read romance novels."
