Strada Floats Office Demolition for Homes in Palo Alto

Strada Investment Group’s move away from offices in favor of residential continues in the Bay Area.

The San Francisco-based real estate investment firm proposed demolishing four office buildings in Palo Alto to make way for a for-sale housing community near the city’s Baylands Nature Preserve, the San Francisco Business Times reported.

Strada aims to build 145 homes across 65 buildings, each rising three stories, at 2100-2400 Geng Road. Of the 145 homes, 19 of them will be for households making 60 percent of the area median income. In Santa Clara County, that amounts to $81,960 for one person or $117,120 for a household of four.

The site is owned by ARE San Francisco No. 69 LLC, an entity managed by Pasadena-based Alexandria Real Estate Equities. Alexandria bought the Geng Road property, located between Highway 101 and the Baylands Athletic Center, from Hudson Pacific Properties in 2018 for $136 million.

Flexible office provider Regus occupies one of the buildings at 2100-2400 Geng Road. Other tenants include Workday Adaptive Planning, Contemporary Technology University and software company Actian Corporation.

The project is the latest case of Strada betting on residential instead of offices amid a slumping office market across the Bay Area.

At another Alexandria-owned site, Strada has proposed building 1,500 units across two towers at 88 Bluxome Street in San Francisco’s South of Market district, becoming the first firm to take advantage of new regulations allowing large-scale development projects in Central SoMa to shift from commercial to residential use. Alexandria Real Estate and TMG Partners were previously entitled to deliver a 1.1-million-square-foot mixed-use development including 775,000 square feet of offices. Strada’s plans for the 2.6-acre site call for 785 units in one 599-foot tower and 715 units in a smaller 528-foot building.

In July, the company received approval from the San Francisco Port Commission to modify its proposal to build housing and office space on the Embarcadero. The developer will be allowed to build 618 units of housing at Seawall Lot 330, currently a parking lot, while pausing to reevaluate the construction of a 375,000-square-foot office building on a 13-acre site at Piers 30 through 32 across the street. That office development will be placed on hold until at least early 2027. The company changed its plans in response to the San Francisco commercial real estate market as its slow post-pandemic recovery continues, Jesse Blout, founding partner at Strada, told the San Francisco Examiner. — Chris Malone Méndez