Harvest Buys Palo Alto Property for $163 Million

Harvest Properties spent nine figures on a Palo Alto research and development campus with hopes of turning some of that space into housing.

The San Francisco-based firm acquired a 24.5-acre research and development campus at 3825 and 3875 Fabian Way in Palo Alto for $163 million, the Silicon Valley Business Journal reported. The seller was Alexandria Real Estate Equities, which paid $292 million for the property in 2019 during the height of the life sciences boom.

The 44 percent price cut speaks to how sharply the life sciences market has fallen after years of fast expansion. Weak demand, rising vacancies and falling rents, along with dwindling federal funds for life sciences tenants under the Trump administration, have left landlords with excess lab space across the Bay Area, forcing some owners to sell at steep losses.

Harvest plans to retain the campus’ primary tenant, satellite manufacturer Lanteris Space Systems, which was acquired by Houston-based Intuitive Machines in an $800 million deal last year. Harvest’s long-term space needs remain uncertain, though it is reportedly considering focusing on the demand for housing in the area rather than the lack of demand for life sciences space. The firm is exploring redevelopment of roughly half the property into housing, according to sources cited by the Business Journal.

A future proposal could include apartments and townhomes, adding another residential project to a city that has become increasingly receptive to new development under California’s recent housing laws. Palo Alto has seen a wave of redevelopment proposals as state mandates push cities to approve more housing after decades of underbuilding. Under its housing element, the City of Palo Alto is required to plan for 6,086 new housing units by 2031.

Harvest has been a growing presence in Palo Alto. Earlier this month, General Motors agreed to lease nearly 340,000 square feet at Stanford Research Park, which Harvest Properties and TPG Real Estate acquired last year for $220 million.

— Chris Malone Méndez