Shorenstein pays $1K psf premium for Redwood City offices

Shorenstein is betting on Bay Area office recovery, plunking down a pretty penny for an office building in Redwood City.

The San Francisco-based real estate firm acquired the six-story, 76,700-square-foot building at 550 Allerton Street for $78 million, or $1,018 per square foot, the Silicon Valley Business Journal reported.

The seller, Premia Capital, developed the property in 2018. The building is 81 percent leased with venture capital law firm Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP serving as the anchor tenant. Newmark’s Steve Golubchik, Edmund Najera, Darren Hollak and Brendan Raney represented both the buyer and seller in the sale.

The $1,018-per-square-foot price is above average for the Redwood City market. Office buildings in the Silicon Valley city command an average per-square-foot asking price of $868, with listings maxing out at $1,346 per square foot, according to LoopNet.

Premium downtown offices such as 550 Allerton have been commanding outsized demand in the Peninsula and Silicon Valley, real estate sources told the Business Journal. In Redwood City, Cooley LLP agreed to lease a planned office tower at 1900 Broadway, relocating from its offices at Stanford Research Park in Palo Alto. Another law firm, Orrick, Herrington & Sutcliffe LLP, also recently signed on to move its Silicon Valley headquarters to Redwood City. Companies leasing top-of-the-market space in downtown Redwood City are paying roughly 2.5 times the rents in traditional suburban office parks, according to the Business Journal.

The Silicon Valley office market closed the second quarter with a 15.2 percent vacancy rate, according to CBRE’s Q2 report. Class A properties were the most occupied with a vacancy rate of 14.1 percent. Leasing activity was up 15.7 percent quarter over quarter, bolstered by a 9.8 percent increase in leasing at Class A properties such as 550 Allerton. The second quarter marked the seventh consecutive three-month period where overall office vacancy in Silicon Valley either decreased or held steady.

— Chris Malone Méndez