Hudson Pacific Properties has sold a 182,700-square-foot office campus in Palo Alto for $23 million, as tenant Google nears the end of its lease.
The Los Angeles-based real estate investment trust has traded the four-building Foothill Research Center campus at 4001-4009 Miranda Avenue, the Silicon Valley Business Journal reported, citing an earnings call. The buyer was undisclosed.
The deal works out to $126 per square foot, which could reset the local office market.
The REIT announced the sale Tuesday during an earnings call. Last year, the building generated $14.5 million in rent, or $79 per square foot.
Victor Coleman, CEO and chairman of Hudson Pacific, said the company saw more value in selling the property than pouring more money into it. The two-story research campus, built in 1991, is located in Stanford Research Park, according to LoopNet.
Google, which has occupied the offices since 2020, has a lease that will expire in February. It’s not clear if it plans to renew.
“Candidly, I think it would have cost us capital dollars as well as some favorable aspects around our existing ground lease portfolio with Stanford that would have impacted the viability of that asset to be re-tenanted going forward,” Coleman said during the call.
The company earlier this year reported the estimated value of Foothill Research Center had dropped by the end of last year, resulting in a $60.2 million impairment loss.
Coleman didn’t disclose the buyer, saying the deal was “a unique transaction in the market and it’s a unique transaction to both the buyer and the seller’s relationship.”
The Mountain View-based Google leases four properties from Hudson, which generate $52 million in rent per year, or 14.3 percent of Hudson’s revenue, according to a 2023 earnings statement.
Hudson Pacific Properties, which owns 54 properties, reported $200 million in revenue in the third quarter, down from $231 million the same period last year. More than $166 million came from office rentals, while $13.7 million came from film studio rentals.
— Dana Bartholomew
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