100,000 SQ FT Embarcadero Corporate Center in Palo Alto Hits the Market

Palo Alto Embarcadero Corporate Center 2479 East Bayshore Road Belmont Embarcadero Capital Partners Newmark Grubb Knight Frank San Francisco REIT Caltrain

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By Jon Peterson

One of the few 100 percent fee simple interest office buildings in Palo Alto is happening with the sale of the 100,734 square foot Embarcadero Corporate Center located at 2479 East Bayshore Road, according to sources familiar with the property. There is no indication at this time what the price point might be on a per square foot basis.

[contextly_sidebar id=”3Gg11nQ1Pbk0JrWnRtGqmx5SRQH0HCzw”]The seller is Belmont-based Embarcadero Capital Partners. According to its Web site, it has owned the asset since 2007. This is very typical of office buildings in Palo Alto, which tend to be owned by private capital sources that hold onto assets for a long time. In fact, there have been only three trades of fee simple transactions in the last ten years, excluding portfolio offerings.

The seller has listed the sale of the property through Newmark Grubb Knight Frank out of its San Francisco office. One of the listing agents involved in the sale is Steven Golubchik, a vice chairman with the company.

There will be some definite upside with the property in the future. The current occupancy of the asset is 96 percent, and rents in the property are now 15 percent below market. The tenants in the property now have an average lease term of 2.16 years left to go on their leases. This situation allows tenants the ability to maintain a Palo Alto address in the Bayshore submarket where rents are around 40 percent below other Palo Alto and urban Silicon Valley markets. These factors have created high tenant retention and occupancy levels that outperform the market and provide strong downside protection and cash flow security.

The expectation is that the property will attract a wide range of capital sources that are seeking a core to core plus asset in the Palo Alto market. Potential buyers would include foreign capital sources, core commingled funds and REITs.

The Palo Alto office market is one that has very high barriers to entry for new office space. The city is known as a place where there is a lack of available development sites and a reputation of costly and time consuming processes to develop and deliver new supply.

Embarcadero Corporate Center is located close to Caltrain. The property offers tenants connectivity to Caltrain via shuttle service with two stops away from the property.

West Coast Commercial Real Estate News