By Meghan Hall
Guardant Health has agreed to take 250,000 square feet of space in Palo Alto’s Stanford Business Park, one of the region’s most sought-after hubs among technology and life sciences companies alike. Currently, Guardant is based in Redwood City, but it’s new digs—owned by Sand Hill Property Company—could provide the firm with plenty of room to grow. The lease was signed on July 31st, according to SEC filings.
Guardant has agreed to take space at 3000 Hanover St. beginning October 1, 2021 through June 30, 2022, although extensions are feasible. The lease stipulates a monthly base rent of $920,000 for the first year, $1.184 million in monthly base rent for the second year, and $1.5 million in base rent for the third year of the lease. After, base rent is subject to annual increases of three percent. Guardant is entitled to base rent abatement for the first five months of its lease and will be awarded a tenant improvement allowance of more than $24 million.
According to public documents, the office and laboratory space will support the firm’s future growth. Guardant Health works to develop blood tests for early cancer detection in high-risk populations.
Sand Hill Property Co. originally purchased the office building for $380 million, or $696 per square foot in the fourth quarter of 2018. The property totals 546,000 square feet and was originally constructed in 1985. The sale included a ground lease, a typical agreement at Stanford Business Park, where the university maintained ownership of the 36.5 acres of land underneath the building. Sand Hill Property Co. also owns 3251 Hanover, directly across from 3000 Hanover, through a partial assignment from Lockheed Missiles and Space Company. 3175 Hanover, also nearby, is owned by Sand Hill Property Co.; the building totals 130,000 square feet and is leased to Cooley LLP.
3000 Hanover was formerly occupied by Hewlett Packard, who vacated it at the end of 2018 after moving its headquarters to Santa Clara. Cushman & Wakefield’s David Hiebert and Steve Bouret were hired to lease out the property. Located at the corner of Hanover St. and Page Mill Rd., the property is comprised of four levels, ranging in size from 91,019 square feet to 200,519 square feet. Amenities include open patio areas for dining and meetings, an executive brief center, a kitchen and café, conference rooms and a media studio.
According to a recent report released by Cushman and Wakefield, northern Silicon Valley, where Palo Alto is located, continues to outperform other markets when it comes to rent. Palo Alto has the highest rents, at $7.01 per square foot, with Mountain View and Menlo Park following behind at $4.43 per square foot and $4.38 per square foot, respectively. The R&D sector saw its vacancy rate increase throughout the second quarter to 10.6 percent, and leasing activity dropped, coming in at 1.8 million square feet. Many companies, notes Cushman and Wakefield, have put expansion plans or moves on hold. There were only three transactions over 100,000 square feet during the second quarter. Facebook expanded by 229,000 square feet in Fremont, while Kodiak Sciences leased 155,000 square feet in Palo Alto. In a renewal, RMS continued to hold 102,000 square feet in Newark. Even as the market has slowed, Cushman and Wakefield believes that such activity will help the market recover faster than others, especially due to its position as a less dense and low-rise market.