One of the few 100 percent fee-simple interest office buildings in Palo Alto has been sold for $77 million, or roughly $764 per square foot. The 100,734 square foot Embarcadero Corporate Center is located at 2479 East Bayshore Road, and it was owned Belmont-based Embarcadero Capital Partners since 2007.
The seller had 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.
The property offers some upside in the future to the new owners. While the current occupancy of the asset is 96 percent, rents in the building are now approximately 15 percent below market. On average the tenants in the property now have a lease term of 2.16 years left to go on their leases.
The buyer of the asset is an entity called Gwin Property Inc., which was formed in November of 2016. It lists its address as 162 Constitution Dr. in Menlo Park, which is home to OPPO Digital, the designer and maker of high quality digital electronics. OPPO is owned by Chinese company BBK Electronics.
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 to develop and deliver new supply. According to an offering document, Palo Alto multi-tenant office projects over 100,000 square feet owned fee simple are seldom brought to the market. There have been only three such transactions in the last decade, excluding portfolio offerings, making this a truly generational opportunity.
Embarcadero Corporate Center is located close to Caltrain. The property offers tenants connectivity to Caltrain via shuttle service with two stops in close proximity to the property.