Invesco is Set to Take 49 percent Interest in Sand Hill Commons for $107MM

Invesco, San Hill Road, Colliers International, The Courson Company, Clarion Partners, Palo Alto, Sand Hill Commons, 2882-2884 Sand Hill Road

By Jon Peterson

In a rare transaction on Sand Hill Road, Atlanta-based Invesco Real Estate has been selected as the buyer of a 49 percent interest in the 133,124 square foot Sand Hill Commons located at 2882-2884 Sand Hill Road in Palo Alto. The purchase price is projected to be around $1,650 per square foot or $107 million, according to sources aware of the transaction.

Invesco declined to comment through an e-mail for this story. The seller of the interest in the property is New York City-based Clarion Partners, who has owned the property since 2006. At the time, the sale to ING Clarion was reported to be a record-shattering $1,000 per square foot, and it was a first transaction to close in over 20 years. Clarion also declined to comment on the details of the transaction when reached about this story. The sale of the property has not closed yet.

The transaction with Sand Hill Commons is projected to produce a 5 percent cap rate, according to sources familiar with the deal. This return is based on the property’s current net operating income.

Sand Hill Commons is now fully leased. Some of the major tenants in the property include Draper Fisher Jurvetson, Charles River Ventures, Menlo Ventures and Battery Ventures. The remaining interest in the property is held by Menlo Park-based The Courson Company.

The office market in Palo Alto has shown a big surge in asking rents. According to the 3rd Quarter 2014 Research & Forecast Report by the San Jose office of Colliers International, average asking rents were at $6.47 per square foot full service. This figure is 85 percent higher than the average across the rest of Silicon Valley.

The class A office space in Palo Alto had a sharp drop in vacancy from the second to the third quarter. Data from Colliers International stated that the availability rate went from 9.7 percent in the second quarter to 5.5 percent in the third quarter. The total square footage in the Class A market is 4.49 million square feet.

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