Lift Partners enters Menlo Park market in $25M deal

Value-add property investor acquires vacant building and parking lot in city’s priciest industrial sale since 2015

3575 Haven Avenue and Lift Partners’ Michael Murray (Loopnet, Lift Partners)
3575 Haven Avenue and Lift Partners’ Michael Murray (Loopnet, Lift Partners)

Lift Partners has acquired a vacant industrial building and about half an acre of adjacent surface parking in Menlo Park for nearly $25 million, the city’s priciest industrial real estate trade in seven years.

The San Francisco-based real estate investment company paid about $10.8 million an acre to acquire the single-story building at 3575 Haven Avenue and the surface lot immediately north of it. The seller was a Palo Alto-based limited liability company whose name matches the building’s address, according to public records. The off-market sale closed Sept. 14 but hasn’t been previously reported.

Lift declined to comment on the deal. The company acquired both sites through a $205 million real estate fund, its third. The fund, which closed last year, received commitments from endowments and private investors and targets office and industrial value-add properties along the West Coast. The Menlo Park properties are the fund’s fourth and fifth acquisitions to date, following two in Washington and one in Southern California, according to Lift’s website.

The 37,000-square-foot Haven Avenue building was completed in 1981 and last sold in 1998, with title service records showing that the previous owner didn’t pay a transfer tax to acquire the property. AM Party Rentals, the building’s sole tenant, vacated it at the time of the most recent sale, according to people with knowledge of the deal.

Lift plans to make a few changes to its interior to make it more attractive to prospective tenants, including building toilet rooms in the office and warehouse areas and adding break rooms and assembly space for research-and-development users, said those people, who requested anonymity because they weren’t authorized to publicly discuss the company’s plans.

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The deal underlines how difficult it is to break into Menlo Park’s industrial market, as Lift paid nearly $1.4 million more per acre compared with Helios Real Estate Partners’ July acquisition of a vacant building about 1.5 miles south. Helios paid $16 million for the 35,000-square-foot warehouse and is working on converting it into a biology lab. That deal is this year’s only comparable industrial sale to Lift’s in Menlo Park, where just four others have closed as of late August, according to data from Reonomy, a commercial real estate analytics firm.

The last time a Menlo Park industrial site sold for a higher amount than what Lift paid was February 2015, when Meta purchased Prologis’ 21-building Menlo Science & Technology Park for $395 million, Reonomy data show.

The LIft deal also represents a bet by the company that the Mid-Peninsula industrial market’s record-low vacancy rate will translate to strong demand for the Menlo Park space. The market, as defined by brokerage JLL, includes Menlo Park, Brisbane and Daly City, Burlingame and Millbrae, South San Francisco and San Bruno, Belmont and San Carlos, Redwood City, and San Mateo and Foster City.

Vacancies for warehouse, distribution and manufacturing space in Menlo Park were 2.6 percent at the end of last quarter, slightly above the market-wide vacancy rate, JLL data show. And with solid tenant demand and no new industrial product under construction in the third quarter, market dynamics remain in favor of landlords, according to JLL.

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