SUNNYVALE — Intuitive Surgical has decided that to stay local — and expand in Silicon Valley — it must buy local real estate, a philosophy that fuels the company’s remarkable burst of property purchases in Sunnyvale.
Over a roughly three-year span, Intuitive Surgical has been wheeling and dealing in local real estate, spending an eyebrow-raising $109.1 million purchasing Sunnyvale properties, all close to its headquarters at 1020 Kifer Road.
“Silicon Valley is the intersection of medicine and technology,” said Gary Guthart, chief executive officer with Intuitive Surgical, maker of an advanced medical robot called Da Vinci Surgical System. “We are deeply rooted in the soil of Silicon Valley.”
Over time, Intuitive Surgical decided the place to buy was in its home territory of Silicon Valley, and Sunnyvale in particular.
“We have campuses and buildings in other places, but we are anchored here, we are rooted here,” Guthart said. “We have important design studios, training facilities here. We have our core manufacturing here in Silicon Valley.”
Intuitive Surgical’s core technology, which Dun & Bradstreet describes as “advanced surgical equipment” with an “artistic flair,” has an impressive pedigree. The Da Vinci system was born at legendary SRI International, originally the Stanford Research Institute. The Da Vinci robots also have connections with NASA-Ames and the Defense Advanced Projects Research Agency (DARPA).
“The talent and the ecosystem that is Silicon Valley fuels us and we wanted to be here,” Guthart said. “To support the growth of the company, we needed additional space in Silicon Valley. We wanted to acquire properties near our headquarters. We have rented offices near our main hub in Sunnyvale. We try to consolidate where we can.”
One major cluster of buildings consists of the company headquarters at 1020 Kifer Road, as well as adjacent or nearby buildings at 1016, 1018, 1050, and 1090 Kifer. Next to this cluster is a one-story building at 950 Kifer.
“I remember walking into the first building we bought, at 950 Kifer Road,” Guthart said.
The Intuitive CEO recalls that the office building had been occupied by a golf-oriented dot-com firm. One room contained an artificial putting green. That golfing carpet had to be ripped out.
In 2001, Intuitive Surgical was leasing the building, which totaled 105,000 square feet, regulatory filings show. The building was the fledgling firm’s corporate headquarters at that time. In 2004, Intuitive Surgical bought the 950 Kifer site for $19.9 million in cash.
“We decided, why rent when we can buy,” Guthart said.
These days, the 950 Kifer building that was the first headquarters could accommodate about 525 workers. Today, Intuitive Surgical says it employs 7,000 worldwide, of which more than half are located in Northern California.
“We have mechanical engineers, computer engineers, electrical engineers, people who are experts in optics, artificial intelligence, machine learning,” Guthart said. “We are not a cloud company. We make physical products and do physical things in health care.”
Having manufacturing operations in Silicon Valley creates important operational synergies, according to Intuitive.
“We believe that some parts of manufacturing are important to have where our engineers are located,” Guthart said. About 10,000 individual components go into a Da Vinci surgical robot. Guthart added, “This is very high precision work and very low volume. That’s why you want manufacturing engineers and product lines to be co-located.”
During a stretch of three and a half years from January 2017 through June 2020, Intuitive Surgical’s shopping spree totaling $109.1 million has encompassed at least nine parcels with 13 addresses on streets that include Kifer Road, Commercial Street, and Sonora Court.
Besides the recent property purchases, the multi-building cluster that is the core of Intuitive’s Sunnyvale presence has an assessed value of $203.8 million, county documents show.
Intuitive Surgical also has leased two big buildings in Santa Clara, a few minutes from the Sunnyvale headquarters. These offices total a combined 210,000 square feet.
At the same time that the property purchases have been ongoing, Intuitive is constructing a brand-new building at 1050 Kifer Road that is part of a new engineering campus for the company.
The expansion and property deals are occurring amid the coronavirus and social distancing protocols.
Plus, long-term challenges loom. Among these: housing prices, traffic woes, the cost of living, and the education system.
“It’s not the geography of Silicon Valley, it’s the people who make it work,” Guthart said. “It the quality of life and the ability of people to move here are impaired, then the discussion becomes different. But so long as Silicon Valley keeps attracting fantastic human beings from around the world, it will remain a great place to be.”
