While news of late has focused on Tesla’s expansions across the globe and plans to relocate it headquarters to Austin, Tex., the company has just completed an office expansion in its hometown for additional 325,000 square feet, according to sources with knowledge of the leasing market in Palo Alto. The electric vehicle and energy company will be leasing the space at 1501 Page Mill Road from Hewlett Packard, in a building that once served as the global headquarters for the technology giant.
The lease was secured by JLL’s Timothy Ogilvie, senior vice president, and Toss Vallentine, managing director, who worked on behalf of Hewlett Packard. Douglas Sharpe, executive vice president at NAI Northern California, represented Tesla in the deal.
Tesla’s lease will encompass roughly half of the remaining HP campus, which is just minutes from its current headquarters located at 3500 Deer Creek Road. Plans for the new facility have not been shared, but this location does provide a prime address on one of the most storied streets in Palo Alto and is centrally located within the Stanford Research Park. According to a property flyer from JLL, the building features efficient floor plates, ample natural light, an on-site cafeteria and coffee bars. It also has a conference center as well as outdoor seating areas.
Tesla’s lease will be for roughly ten years, according to sources, and the building will continue to be owned by Hewlett Packard with a land lease to the Stanford University Board of Regents.
According to JLL’s Silicon Valley Q3 2021 office statistics, Palo Alto is one of Silicon Valley’s smallest submarkets with a total of 3.1 million square feet of space. This lease represents roughly 10 percent of the entire market, which is also the amount of direct vacancy available in Palo Alto, according to JLL. The city also boasts the highest leasing rates in Silicon Valley at $9.20 per square foot in average direct asking rent. Mountain View comes in second at $7.49 per square foot.
The active office tenant requirements have picked up since the thick of the pandemic when many requirements were placed on hold, states the report. There are now 3.6 million square feet of active office tenant requirements across Silicon Valley.
The venture capital and IPO markets continue to be robust, according to JLL. Silicon Valley firms received $17 billion in venture capital investment year-to-date. On the IPO side, 26 Silicon Valley-based companies went public, adding more than $112 billion to the region’s market cap.