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San Francisco space for Google

Google is taking over a 35,000-square-foot former printworks in San Francisco's trendy Mission district as part of its effort to recruit engineers who do not want to work in its vast Silicon Valley headquarters.

The space, which is large enough to hold up to 200 people, is being earmarked by Google as a place to house the start-ups it acquires, according to several people familiar with the situation.

The 1920s-era building at 298 Alabama Street previously housed a newspaper and catalogue printer, Howard Quinn, which had been in the same location for 50 years until it went out of business in 2012. Printing companies have been hit hard by the rise of online publishing, fuelled by Google's search and advertising technology.

The building is zoned by the city's planning authorities for manufacturing, meaning it could be used to develop gadgets and devices by hardware companies. Amid an acquisition spree in recent months, Google spent $3.2bn to buy Nest Labs, maker of "smart home" devices including a thermostat and smoke alarm, and also paid an undisclosed sum for Bot and Dolly, a San Francisco start-up which provides robotics for filmmakers. Its latest acquisition is SlickLogin, an Israeli developer of security technology. The security start-up announced the deal this weekend.

The leasing of the large new San Francisco space suggests that Google may be planning to buy further hardware start-ups as it expands from web search into new markets such as robotics, wearable technology and the "internet of things".

"When Google is buying companies, they don't want to work in the big corporate building in San Francisco or Mountain View," said one source in the neighbourhood, "so they are acquiring something cool in the Mission where engineers want to work."

Google declined to comment.

Google's move is the latest example of the growing trend of Silicon Valley internet companies expanding their presence in the city of San Francisco. In an intense war for tech talent, companies are hoping to improve their appeal to new employees by allowing them to live and work in desirable areas of the city rather than make the hour-long commute to Silicon Valley towns such as Mountain View, Palo Alto and Cupertino. The city is particularly popular among consumer technology companies with Twitter, Square and Pinterest all headquartered here.

This influx has driven up San Francisco's commercial rents as well as local house prices. Offices that would have cost $20 per square foot just a couple of years ago are now being leased for more than $40 and competition for the best spaces is fierce.

Google already has a large office in San Francisco's SoMa district and is also opening another office in the nearby South Park area to house its Google Ventures team, which has become one of Silicon Valley's most active early-stage investors.

Airware, a Google investment which develops systems for commercial drones, relocated to San Francisco from Orange County in Southern California last month.

"We're moving our HQ to San Francisco to take advantage of the talent, resources and energy that only the Bay Area can offer," Airware said in a blogpost.

Menlo Park-based Facebook is also rumoured to be looking for new space in San Francisco and venture capitalists such as Benchmark and Kleiner Perkins Caufield & Byers are moving into the city to be closer to their start-up investments.

Google's move also comes at a time when its fleet of commuter buses, which ferry people down to the Valley, are being targeted by protesters who claim the tech companies are driving up rents, forcing out lower-paid workers and changing San Francisco's culture.

The hipster-friendly Mission district has seen particularly radical gentrification in the last few years. The newly renovated office that Google is leasing stands at the corner of Alabama Street and 16th Street, 10 minutes' walk from Valencia Street, the site of many popular bars and coffee shops.

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