menlo park, california · located at the heart of silicon valley in menlo park, california. the...
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Holliday GP Corp. (“HFF”), CaliforniaDepartment of Real Estate License #01385740.
MENLO PARK, CALIFORNIA
EXECUTIVE SUMMARYHolliday Fenoglio Fowler, L.P. (“HFF”) as exclusive advisor, is pleased to present the opportunity to acquire the 100% fee-simple interest in 200 Middlefield (the “Property”), a Class A office property located at the heart of Silicon Valley in Menlo Park, California. The 86.6% leased property encompassing 43,083 square feet underwent a full re-build in 2012 and is located within walking distance to Downtown Palo Alto’s renowned retail amenity base and less than one mile from the Palo Alto and Menlo Park Caltrain stations.
200 Middlefield is a generational opportunity to acquire a recently constructed core-quality office project in one of the most sought after submarkets in the country.
PROPERTY OVERVIEWAddress 200 Middlefield Road, Menlo Park, CA 94025
Size 43,083 Rentable Square Feet
Percent Leased 86.6%
Year Built 2012
Parking 3.8/1,000 (Surface & Subterranean)
Site Area 2.03 Acres
Weighted Average In-Place Rent $6.82 PSF NNN
Weighted Average Market Rent $8.25 PSF NNN
% Below Market Rents 17%
Weighted Average Remaining Lease Term 4.25 Years
2 | 200 MIDDLEFIELD ROAD
INVESTMENT HIGHLIGHTS IRREPLACEABLE CLASS A
OFFICE BUILDING IN THE WEST COAST’S MOST SUPPLY-
CONSTRAINED MARKET
HIGH PROFILE CORPORATE NEIGHBORS
WORLDWIDE EPICENTER OF TECHNOLOGY
CREDIT TENANCY
ATTRACTIVE VALUE TO DOWNTOWN PALO ALTO
DIRECT ACCESS TO EXECUTIVE HOUSING & AMENITIES
ABOVE MARKET PARKING RATIO
GENERATIONAL ACQUISITION OPPORTUNITY IN HIGH
BARRIER TO ENTRY MARKET
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Irreplaceable Class A Office Building in the West Coast’s Most Supply-Constrained Market
200 Middlefield is an irreplaceable, core office building that is appealing to a wide variety of high-profile corporate users due to its institutional image, proximity to major transportation corridors, ability to accommodate a variety of tenant demand requirements, indoor / outdoor amenities and above-market parking ratio.
The Property was completely re-built and seismically upgraded in 2012 at a cost comparable to or above new construction. Recent renovations include steel reinforcement of the entire project, new roof and HVAC systems, dual two-story lobby entrances with new elevator cabs, high-end second floor tenant improvements, and the redesign of the interior courtyard and subterranean parking garage.
These upgrades significantly reduce the need for future capital outlays and further solidify 200 Middlefield as one of the premier Class A office buildings in the region.
PALO ALTO
DOWNTOWN PALO ALTO
UNIVERSITY AVE
TOWN & COUNTRY VILLAGE
CALIFORNIA AVESTATION
PALO ALTOSTATION
4 | 200 MIDDLEFIELD ROAD
CORPORATE NEIGHBORS
Company Address
Summit Partners 200 Middlefield Road
OptumSoft 200 Middlefield Road
Barclays 155 Linfield Drive
Blue Run Ventures 545 Middlefield Road
Canyon Bridge 100 Middlefield Road
Demira 275 Middlefield Road
Globality, Inc. 8 Homewood Place
McDermott Will & Emery 275 Middlefield Road
Quantifind 8 Homewood Place
Riverwood Capital 70 Willow Road
Robinhood 85 Willow Road
TA Associates 64 Willow Place
Technology Crossover Ventures 250 Middlefield Road
High-Profile Corporate Neighbors
The Middlefield Corridor offers the prestige of a Menlo Park address with easy access to the retail amenities of Downtown Palo Alto.
• Numerous tenants have relocated to the Middlefield Corridor from both Sand Hill Road and Downtown Palo Alto.
• The Middlefield Corridor offers abundant parking, which is difficult to find in Downtown Palo Alto.
STANFORD UNIVERSITY
STANFORD SHOPPING CENTER
STANFORD MEDICAL CENTER
WILLOW RD
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• The desirability of these projects is evidenced by the fact that almost all are leased to credit tenants with limited downtime and high occupancy rates during ownership.
• The limitations on new development coupled with high tenant demand for core-quality office space has instilled a long-term ownership mentality in the market and, accordingly, many developers build with the intent to hold long term.
Generational Acquisition Opportunity in High Barrier to Entry Market
The municipalities of Menlo Park and Palo Alto rarely allow new construction, making them some of the most supply-constrained real estate markets in the country. Development opportunities are hindered by a politically-mandated cap on market size, creating significant barriers to entry. This notion is further tempered by onerous city-imposed development guidelines and the customary risks associated with speculative development and financing.
6 | 200 MIDDLEFIELD ROAD
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Strategic Central Location in Silicon Valley – Worldwide Epicenter of Technology
Silicon Valley, specifically Menlo Park and Palo Alto, has gained international recognition as the epicenter of technology and innovation. The high concentration of world-renowned venture backed firms continues to draw outside venture capital investment into the region. 200 Middlefield is at the heart of this market.
$5.2 BILLION OR 21% OF TOTAL VENTURE CAPITAL INVESTMENTS WERE
MADE IN SILICON VALLEY IN Q4 2018
MENLO PARK / PALO ALTO Historic Asking Rates and Vacancy
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QUARTERLY US VENTURE CAPITAL INVESTMENT IN SILICON VALLEY
HIGHEST RENTS IN THE NATIONPalo Alto/Menlo Park average Class-A asking rates of $8.33
PSF/Month NNN
OUTSIZED RENT GROWTHAverage annual growth of 8.2%
since 2010
SINGLE DIGIT VACANCYCurrent Vacancy in Menlo Park of 4.1% follows 58
consecutive quarters of single digit vacancy
SEVERE SUPPLY CONSTRAINTS2015 Palo Alto law caps office growth at 50,000
SF per year across Downtown Palo Alto, California Avenue, and El Camino Real submarkets, further
increasing demand in Menlo Park
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Above-Market Parking Ratio
• 200 Middlefield offers a parking ratio of 3.8/1,000 square feet, which is well above the Silicon Valley market standard of 3.3/1,000 square feet and substantially higher than Downtown Palo Alto’s average parking count of 2.4/1,000 square feet. The Property’s parking count includes both surface and secured subterranean stalls. The subterranean garage has direct access to all floors of the building through the rear lobby.
• With a higher parking ratio than its competitive set and extremely limited options in Downtown Palo Alto and Menlo Park, the Property is able to compete favorably amongst its peer group.
• As parking space allocations continue to shift downward and parking ratios for new construction are capped by city planners, the ability to offer an above-market parking count will significantly increase tenant demand and rental rate premiums in the future.
SILICON VALLEY AVERAGE PARKING RATIO*
Only 19% of buildings in Silicon Valley have a
dedicated parking ratio of 3.8/1,000 or higher.
*Office buildings between 20,000 - 50,000 RSF
19%
41%
40%
3.8+ Ratio
2.0 - 3.7 Ratio
0.0 - 2.0 Ratio
Credit Tenancy with Substantial Tenant Investment
The tenant base demonstrates the asset’s ability to attract high-profile credit tenants that view the location and institutional-quality of the building as key to retaining employees and maintaining a high-end corporate image. Beyond the capital invested by the current ownership, an additional $5.1 million or $121 PSF has been invested by tenants themselves.
Tenants have flocked to the project because of its proximity to retail and its high-end “lifestyle” feel. The building offers an amenity-rich environment with an interior courtyard and granite fountains with direct access for ground floor users.
• Consistent with the best-in-class nature of the project and its high-end image, tenants have constructed spaces from a warm shell condition with estimated tenant co-investments ranging from $100 PSF to $207 PSF for individual tenant suites.
• Summit Partners has invested over $4.6 million or $207 PSF in out-of-pocket tenant improvements. The Summit Partners space features an open floor plan with vaulted ceilings, a two-story glass lobby entrance, four conference rooms, two employee kitchens, stunning restrooms, floor-to-ceiling wooden cabinets and storage, and a structurally-enhanced fitness area with lockers and showers. All of these improvements are a testament to the entrenched tenancy and best-in-class quality of construction.
CAPITAL INVESTMENTS (TENANT FUNDED)
$207PSF
Suite 100 $100PSF
8 | 200 MIDDLEFIELD ROAD
An Attractive Value to Downtown Palo Alto
200 Middlefield benefits from heightened demand for Caltrain-served office and proximity to a rich amenity base, while providing tenants with a discounted option to Downtown Palo Alto.
• With the rental spread between Downtown Palo Alto and the Middlefield Corridor currently at 16%, the Corridor offers users a compelling value proposition to Downtown’s escalating cost environment.
• 200 Middlefield’s highly reusable improvements and discounted rent make the Property a cost-efficient and attractive opportunity for prospective tenants.
EL C
AM
INO
REA
L
PALO ALTOSTATION
ACCESS TO TALENT AND CAPITAL
The Palo Alto Caltrain provides direct access to San Francisco in just 39 minutes
ROBUST TENANT DEMAND
More users seek a walkable amenity-base with direct access to public transit
TENANT RETENTION
Lack of availabilities within downtown submarkets provides for higher tenant retention rates due to limited relocation alternatives
ATTRACTIVE MARKET RENT
Middlefield Corridor office rents provide a 16% discount to Downtown Palo Alto
DOWNTOWN PALO ALTO
8 minwalkdrive20 min
1.4 miles
9 |
Direct Access to Executive Housing & Amenities
200 Middlefield is located directly off Willow Road and El Camino Real and a short distance from US Highway 101, providing direct access to the nearby executive housing corridor. This stretch of communities, including Monte Sereno, Los Altos, Los Altos Hills, Palo Alto Hills, and Portola Valley, features some of the most affluent communities in the Bay Area and includes executives seeking low commute times.
The Property is located within close proximity to some of the most affluent and highly educated communities in the Bay Area including Atherton, Palo Alto, Palo Alto Hills, Los Altos Hills, Portola Valley, Woodside, and Hillsborough.
City% Bachelors Degree or
Higher *Median Household
Income
Woodside 78% $250,000+Atherton 78% $250,000+Los Altos Hills 84% $248,218Hillsborough 76% $238,750Los Altos 82% $208,309Palo Alto 81% $147,537
*25+ Yrs of Age
DEMOGRAPHICS SUMMARY
DESIRABLE AFFLUENT COMMUNITIES IN SURROUNDING AREA
STANFORD SHOPPING CENTERWith 140-plus stores, dozens of restaurants and coffee shops, and public art by nationally acclaimed artists, the open-air Stanford Shopping Center is considered one of the top shopping centers in the country. The Center features award-winning gardens, a European-style street market, and 1.3 million square feet of premier retail space. Located conveniently off El Camino Real near Downtown Palo Alto and Stanford campus, the Stanford Shopping Center serves the nearby affluent communities of Palo Alto, Menlo Park, Woodside, and Atherton.
DOWNTOWN PALO ALTOIn addition to the world-renowned Stanford Shopping Center, Palo Alto features a vibrant downtown shopping district, a popular shopping and restaurant district centered around California Avenue just south of the Stanford campus, and Town & Country Village, a specialty center on El Camino Real across from Stanford Stadium. Visitors will find cafés and a wide variety of restaurants in all four shopping areas, as well as in neighboring Downtown Menlo Park and Downtown Mountain View.
CALTRAINCaltrain is a commuter rail line that stretches from San Francisco to the north and Gilroy to the south. The rail system is comprised of 32 stations, with 29 served daily, two weekend-only stations, and one football-only station located at Stanford University. Trains leave San Francisco multiple times every hour and the Baby Bullet can make the 32-mile commute between San Francisco and the Palo Alto Caltrain Station in less than 39 minutes.
UNIVERSITY AVENUE CORRIDOR200 Middlefield is just blocks off University Avenue, a major Palo Alto thoroughfare that features a variety of restaurants, coffee shops, bars, hotels, banking, and other services.
PROXIMITY TO WORLD-CLASS AMENITIES
200 Middlefield is a short distance from numerous restaurants and several of the most recognized names in experiential retail.
®
10 | 200 MIDDLEFIELD ROAD
STANFORD SHOPPING CENTER
TOWN & COUNTRY VILLAGE
DOWNTOWN PALO ALTO
DOWNTOWN MENLO PARK
LOS ALTOS HILLS
PALO ALTO HILLS PORTOLA VALLEY
WOODSIDE
HILLSBOROUGH
ATHERTON
STANFORD UNIVERSITY
PALO ALTOSTATION MENLO PARK
STATION
MIDDLEFIELD RD
UNIVERSIT
Y AVE
SAND HILL RD
WILLO
W R
D
STANFORD MEDICAL CENTER
PALO ALTO
11 |
Holliday Fenoglio Fowler, L.P., HFF Real Estate Limited (collectively, “HFF”), HFF Securities L.P. and HFF Securities Limited (collectively, “HFFS”) are owned by HFF, Inc. (NYSE: HF). HFF and its affiliates operate out of 26 offices and are a leading provider of commercial real estate and capital markets services to the global commercial real estate industry. HFF, together with its affiliates, offers clients a fully integrated capital markets platform including debt placement, investment advisory, equity placement, funds marketing, M&A and corporate advisory, loan sales and loan servicing. For more information please visit hfflp.com or follow HFF on Twitter @HFF.
HFF has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.
BEN BULLOCKSenior Director415.276.6927
[email protected] Lic. #01885337
MICHAEL LEGGETTSenior Managing Director
[email protected] Lic. #01056334
DAVID DOKKOSenior Director415.276.6926
[email protected] Lic. #01960806
GERRY ROHMSenior Managing Director
CA Lic. #01367742
THOMAS FOLEYDirector
CA Lic. #01997105
ANDIE FEZELLAnalyst
[email protected] Lic. #02075713
Investment Advisory
Debt Financing
JORDAN ANGELManaging Director
CA Lic. #01419993
KEVIN CUNNINGHAMExecutive Managing Director
CA Lic. #01322886
CHRISTIAN PRELLEManaging Director
CA Lic. #01888351
Market Leasing