Microsoft to Spend $1 Billion to Expand Headquarters

Thursday said it plans to spend $1 billion over the next three years to expand its headquarters outside of Seattle.

The development will increase the campus of the world’s largest software maker by a third and provide the capacity for an additional 12,000 workers, Microsoft said a news conference with Washington state Gov. Christine Gregoire and local politicians.

Microsoft had received approval from the city of Redmond in May for a 20-year expansion plan, but the company said it accelerated those plans due to the need to house more employees as it rolls out crucial new products over the next few years.

Brad Smith, Microsoft’s senior vice president and chief counsel, said new products such as the next versions of its Windows operating system, its Office business software and its push into Web-based services drove the need for more space.

“This reflects our confidence in the future,” Smith told reporters after the news conference. “The software industry is a very fast-paced industry and if anything, we have seen the pace of change accelerate.”

Gregoire and the other politicians pledged to support initiatives to improve infrastructure around the Microsoft headquarters, including revamping the congested roadways connecting Seattle to Redmond.

Microsoft has said it expects to increase its workforce by up to 5,000 employees in the fiscal year ending June 30. It expects roughly 40 percent of those new employees to be hired in the U.S. and the vast majority of those workers will be at its Redmond campus.

Shares of Microsoft fell 25 cents, or 0.93 percent, to $26.66 in Nasdaq trade, while the Dow Jones Industrial average < .DJI> rose 0.23 percent.