An office building on the corner of the El Camino Real and California Avenue has traded for the third time in this cycle, with Los Angeles-based CIM Group buying the asset for nearly $1,400 per square foot, or $33.25 million. The property, located at 490 California Avenue, is just under 24,000 square feet, and it was owned by New York-based Clarion Partners. Clarion had purchased the asset in the summer of 2015, paying $27.75 million, or close to $1,120 per square foot, from Invesco, which in turn owned it since July of 2011, when it paid $19.4 million or $784 per square foot.
The sale was first reported by the Silicon Valley Business Journal.
The property is effectively across the street from the fabled Stanford Research Park, which boasts some of the lowest vacancy rates in Silicon Valley. One of the tenants in the building is Menlo Equities, a prominent Silicon Valley developer and property owner. Online rating company Yelp was once based in the building, as well.
The building was designed by Palo Alto-based Carrasco & Associates and completed in 1986. Two years later, the property was awarded the AIA Santa Clara Valley 1988 Design Award; the asset is used as an example of how a suburban office building can be sited and detailed into an urban context.
Palo Alto today has the second lowest availability rate in Silicon Valley, according to a first quarter of 2017 Colliers International Silicon Valley Research & Forecast Report. At 7.2 percent, only Sunnyvale’s 5.4 percent availability beats it. At the same time, Palo Alto boasts the highest rental rates in the region, according to the same report. Overall, full service rate comes at $7.90, which is an average rate for all property types. Class A space comes in at a whopping $8.62, the highest of any in the Valley.
“It’s tough to pay the high numbers, but people are used to it in Palo Alto just to put their foot in the door,” said David Sandlin, an executive vice president of Colliers in San Jose in an interview with the Silicon Valley Business Journal. “The positive news is there is no other place in the Silicon Valley that gets rents like Palo Alto.”
CIM Group, like Clarion and Invesco, has been an active player in the Bay Area real estate market. It is an active investor across the entire region, most recently spending $180 million to acquire the 356,000-square-foot, eight-story Class-A creative office building in Oakland from Uber. It is also proposing a massive, one million square foot development in Oakland at 2 Kaiser Plaza that would be one of the largest of its kind in the Oakland commercial real estate market.