Office assets in the Silicon Valley — particularly around major tech and education clusters — often garner top dollar from investors and major developers looking to continue to immerse themselves in the Bay Area’s growing economy. Pasadena, Calif.-based Alexandria Real Estate Partners is continuing to grow beyond the 6.5 million square feet it owns in San Francisco with the purchase of a two-story office and research building from Stanford University at the institution’s Stanford Business Park in Palo Alto, Calif. Alexandria paid $100.25 million, or just over $1,002 per square foot, for the 100,000 square foot property in mid-January 2019, according to Santa Clara County documents.
Located at 3170 Porter Dr., the office building is currently occupied by Jazz Pharmaceuticals, which secured its lease for the entire building in 2015. The Stanford Research Park, a 700-acre business complex, opened in 1951 and has a long history of attracting some of the region’s top companies. While Alexandria has purchased the office building, Stanford will retain ownership of the land beneath the park, and companies that purchase buildings in the complex work with the university to secure ground leases. Stanford renovated the building in 2014.
The building sits just off of Page Mill Rd., a major thoroughfare through Palo Alto, and in between Interstate 280 and State Route 82. It is just ten minutes by car from Stanford University and downtown Palo Alto, granting easy access to Caltrain and numerous eateries ranging from Chipotle to INDO Restaurant and Lounge. Ford, TIBCO, Microsoft and HP are just a few of the companies located in the immediate vicinity of the site.
The sale comes at a time when office space in the region garners a premium. According to a fourth quarter Silicon Valley market report released by Kidder Mathews at the beginning of the year, both the average sales price per square foot and leasing rates were close to their highest points in over a decade. Alexandria’s purchase of the property comes on the heels of an active year for the Silicon Valley office market, which saw the average sales price per square foot jump to $577.21. The Jay Paul Company purchased a nine-property portfolio at Cityview Plaza for $283.5 million in July of last year, or around $488.73 per square foot, while McCarthy Cook and Northwestern Mutual Life purchased Castro Station, a three property portfolio in Mountain View for $179.65 million, $1,564.77 per square foot in August, signaling that investors and developers are focusing on quality assets over quantity, the report states.
Stanford University did not immediately return The Registry’s request for comment.