Clarion Buys Palo Alto Asset for $1,120 Per Square Foot

El Camino Real, California Avenue, CIM Group, Clarion Partners, Invesco, Silicon Valley Business Journal, Stanford Research Park, Silicon Valley, Carrasco & Associates, AIA Santa Clara Valley 1988 Design Award
Image courtesy of Carrasco & Associates

All sub-markets are not created equal, and in Silicon Valley, Palo Alto is one of those markets that not only carries a lot of cache, but also has a very limited supply of available office space and a cohort of companies located in the city to make it one of the prime locations in the Bay Area.

In a recent transaction, the New York-based Clarion Partners made a decision to play a more prominent role in Palo Alto with its purchase of 490 California Ave., a roughly 25,000 square foot office building on the corner of El Camino Real and California Avenue that is the home of Menlo Equities, a prominent Silicon Valley developer, and a Palo Alto office of online user rating service Yelp. The price that Clarion paid, according to public records, is $27.75 million, or close to $1,120 per square foot. The seller was Invesco, which had owned the property since July of 2011. At that time, Invesco had purchased the building for $19.4 million or $784 per square foot.

The California and El Camino corner is in very close proximity to Stanford Research Park, which boasts some of the lowest vacancy rates in Silicon Valley. According to a recent JLL study, Stanford Research Park has a total vacancy of 0.6 percent for Class A space, which would make it the lowest vacancy of any Silicon Valley sub-market. In Palo Alto as a whole, according to a second quarter 2015 JLL Office Statistics report for Silicon Valley, Class A space carries at 3.6 percent vacancy, the third lowest in Silicon Valley overall.

Clarion Partners has been an active player in the Bay Area market, and the firm’s Los Angeles office has been primarily responsible for the purchases the company had done in the region over the past decade. In 2014, the firm made several purchases in across the Bay Area, but it wasn’t until last January that Clarion had made a South Bay acquisition since 2008.

In January of last year, the New York investment company purchased the 93,385 square foot Arques Business Park in Sunnyvale for $27 million or $289 per square foot. Later on in June, Clarion paid just over $26 million or $316 per square foot to buy the 82,278 square foot 2901 Patrick Henry office/R&D building in Santa Clara.

Steven Golubchik, Ben Bullock and Josh DiSalle from HFF brokered the deal for the seller.

Photo courtesy of Carrasco & Associates

West Coast Commercial Real Estate News