Alphabet Inc.’s (GOOGL - Free Report) Google has been gobbling up properties. The tech behemoth has leased the current site of a shopping mall in West Los Angeles. It plans to convert the mall into an office campus spanning 584,000 square foot.
Reportedly, the lease is for a term of 14 years, which would begin once the construction on the property is completed in 2022, as scheduled by the company.
We believe that the developments will enable it to carry on with its new growth initiatives.
Coming to price performance, Alphabet’s shares have lost 2.4% in the past year compared with the industry’s decline of 26.5%.
Property Expansion Continues
The company has spent billions in property acquisitions over the past few years. The Los Angeles expansion is the latest one, following Google’s announcement to invest $1 billion to build a new campus in New York last month.
Also, Google recently agreed to pay $110 million to buy more than 10 acres from the city of San Jose, as part of its expansion plans. The company also bought the Chesapeake Commons office park in Sunnyvale earlier this year.
Google has not kept its eyes only on Silicon Valley. In fact, it has been making purchases outside of Silicon Valley as well. Earlier this year, the company spent $2.4 billion to buy New York City's Chelsea Market.
Google is likely to have a competitive edge over other tech bigwigs such as Amazon (AMZN - Free Report) and Apple Inc. (AAPL - Free Report) , which have also been expanding their presence outside of the tech hubs of Silicon Valley and Seattle.
Amazon selected Long Island City, NY and Arlington, VA for building its new headquarters. Also, Apple said that it would invest $1 billion to expand its operations in Austin by constructing a new employee campus in the area.
The most recent purchase is in line with the company’s strategy of actively snapping up properties and continuing expansion outside Silicon Valley. Such prime asset buyouts should definitely enhance overall asset quality and help it carry on with its new growth initiatives.
Zacks Rank and Another Stock to Consider
Currently, Alphabet carries a Zacks Rank #2 (Buy). Another better-ranked stock in the broader technology sector is Facebook, Inc. (FB - Free Report) , carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Facebook is currently pegged at 21.45%.
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