The Sand Hill Commons office complex in Menlo Park not only boasts having all of their space fully leased but they also hold bragging rights to a new Bay Area (if not national) price record.
An Invesco Real Estate affiliate forked over a mind-blowing amount for 49% ownership in the complex set on the well-known Sand Hill Road. It is believed that they paid close to $1,800 per square foot. If this amount is validated, the transaction, which officially closed on January 21st, puts a $240 million dollar valuation on the 133,000 square foot property. It would also set a new record for price per square foot for suburban office buildings in to 50,000 square foot and above range. This deal (if the price is confirmed, possibly through transfer tax data), cements Menlo Park as one of the cities with the most valuable real estate in the world. Beverly Hills is one of the few places with comparable persquare foot prices BUT their transactions as well as others include significant retail components rather than 100% office space.
Setting records is something of a tradition for this property. In 2006 when Clarion bought a stake in the complex, it sold for $1,000 per square foot, a new regional bar for office space at the time.
At 51%, Clarion retains primary ownership of Sand Hill Commons, an attractive, low profile building surrounded by colorfully landscaped pathways. As with many commercial real estate investors, Sand Hill Common’s new part owner is from outside of the United States. Exactly who and from where has not yet been determined, although Asia and the Middle East investors are big proponents of adding U.S. commercial real estate to their portfolios.
There have been a number of staggering Silicon Valley office deals of late, including the sale of 303 Bryant Street in downtown Mountain View, selling late last year for $1,150 per square foot to a German investment fund.
Lease rates at Sand Hill Commons are obviously nowhere near the sizable amounts paid by investors. The average rent per square foot run just under $12 and although rates have risen, they don’t increase nearly as much as properties in areas like downtown Palo Alto.
The proximity of Sand Hill Commons to executive housing and the minimal number of other complexes in the surrounding community reinforce its appeal to investors, very possibly leading to it having shattered its previously set per square foot record.