A family trust has paid $58 million for a 30,000-square-foot office building in South Palo Alto — a price that represents nearly $2,000 per square foot.
The Douglas Living Trust, based in Greenbrae, bought the three-story building at 2555 Park Boulevard, the Silicon Valley Business Journal reported. The seller was Kenson Ventures, based in Palo Alto.
The deal works out to $1,933 per square foot – or up to 10 times what recent buyers have paid for premium offices in Downtown San Francisco.
The sale of the building listed by Savills for sublease comes as offices available for sublease in Silicon Valley hit a record 7.6 million square feet in the third quarter. The office vacancy rate across the tech hub reached 17 percent in June, with more than 20 percent of offices in Menlo Park and Mountain View without desks.
The Douglas trust is likely a stand-in for a venture capital or private-equity firm that wants to move into the building, unidentified commercial real estate experts told the Business Journal.
It’s not clear why such a firm would pay a premium to own, rather than sign a lease.
Kenson, led by biotech entrepreneur Ken Fong, bought the 0.33-acre approved development from Menlo Park-based Tarlton Properties in 2016 for $12.4 million.
The Class-A concrete building with floor-to-ceiling windows, completed in 2018, is a few blocks from the California Avenue Caltrain station.
It was once leased by Tinder, maker of the mobile dating app, which never moved in. In 2019, it was leased by Globality, a startup backed by Softbank. It’s not clear what company had listed its 30,000-square-feet for sublease before the building’s sale.
For comps, last month SKS Real Estate Partners bought a 22-story, 297,600-square-foot office tower at 350 California in San Francisco’s Financial District for $61 million, or $205 per square foot — 76 percent less than its asking price in 2020.
In August, Presidio Bay Ventures bought an 11-story, 157,000-square-foot office tower at 60 Spear Street for $41 million, or $260 per square foot — a third of its 2014 price.
Both sales helped set a new benchmark for office pricing in a city where the number of empty offices now stands at 33.9 percent, followed by 31.5 percent in San Jose and 29.7 percent in Oakland, according to CBRE.
— Dana Bartholomew
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