News

Downtown Palo Alto building sells for $64 million

Massive amount fetched for four-story office building at 100 Hamilton Avenue

A downtown Palo Alto office building has sold for a staggering $900 a square foot, the San Francisco Business Times reported.

The four-story, 72,000-square-foot building at 100 Hamilton Ave. was sold for $64 million by Embarcadero Capital Partners of Belmont to RREEF, the Deutsche Bank real estate investment management business, on behalf of an undisclosed institutional client, the paper said.

"This is a phenomenally high-value transaction," possibly among some of the highest per square foot in the United States, said Tommy Fehrenbach, economic development manager for the City of Palo Alto. The city will receive $3.30 per thousand dollars of the transaction in the form of a transfer tax.

However, a downtown Palo Alto developer and broker recalled a higher per-square-foot price paid for a downtown Palo Alto building during the 1990s tech bubble.

John Goldman, senior vice-president of Premier Properties, said a buyer paid $1,050 per square foot for the building at 151 University Ave. at that time.

Current tenants of 100 Hamilton include Bon Appetit Management and Palantir Technologies.

The building faces Alma Street, with office balconies overlooking the Caltrain tracks. It features two glass-ceilinged atriums, underground parking for 107 cars and a fitness center with adjoining locker room.

"The downtown Palo Alto location provides a high image and visibility along with great access to local dining and shopping," the seller said in a description of 100 Hamilton.

"Palo Alto is also known for its prestigious business environment and the building is in walking distance of the Caltrain."

Goldman described the current commercial real estate environment as "probably the strongest market we've ever seen downtown -- arguably stronger than it was during the late '90s because the quality of the (tenant) firms is stronger.

"Palo Alto has achieved an international reputation for start-ups," he said, describing two CEOs -- one from Australia and another from Pittsburgh -- who recently moved their entire companies here.

"If we had 20 more buildings, we could lease them," he said.

"The legal industry had a huge reshuffling in the recession and now the ones that are back are more aggressive, and the same with banking. Between those and the start-ups it's been unbelievable."

— Palo Alto Online staff

Comments

Like this comment
Posted by Follow-the-Money
a resident of Another Palo Alto neighborhood
on Apr 21, 2011 at 4:45 pm

> on behalf of an undisclosed institutional client, the paper said.

This is not a healthy trend. This is the sort of "client" that has money to launder.


Like this comment
Posted by HUTCH 7.62
a resident of Old Palo Alto
on Apr 21, 2011 at 9:33 pm

Man that 'undisclosed buyer' got ripped off! In this crappy market there are way better deals to be had. And with easier parking than downtown Palo Alto. When are people gonna learn


Like this comment
Posted by musical
a resident of Palo Verde
on Apr 22, 2011 at 8:53 am

"balconies overlooking the Caltrain tracks"

There you go, it's the HSR people spending those billions on future office space. :)


Like this comment
Posted by Frank
a resident of Ventura
on Apr 22, 2011 at 10:37 am

If you've ever thought there's too much money floating around here - this is your poof.

But I love the idea that this is speculation based on the HSP station being built in down town Palo Alto -- maybe I should buy a building near the train station. Oh yea - I don't have $64 Mill.

Still the property tax on that will be appreciated.


Like this comment
Posted by Wondering?
a resident of Another Palo Alto neighborhood
on Apr 22, 2011 at 11:00 am

> Still the property tax on that will be appreciated.

At 1% (to begin with), the tax bill comes to $640,000. About 46% of this will go to the school district, and about 9% goes to the city government. What's not clear yet, is what will be the cost to the city government, and the school district, in terms of new/increased demand for services.

> said Tommy Fehrenbach, economic development manager
> for the City of Palo Alto

This guy is probably costing the taxpayers $200K a year. Seems all the taxpayers are getting for that money is the odd comment to the press about a real estate transaction that he probably had nothing to do with.

If Palo Alto is such a "business magnet", why do we need a "business development manager"?


Like this comment
Posted by loopholes?
a resident of Another Palo Alto neighborhood
on Apr 22, 2011 at 11:13 am

"Still the property tax on that will be appreciated."

Maybe. Maybe not. Perhaps it was one of those"trades" that exist in Prop 13's loopholes for non-residential properties.

We'll see as it becomes public record down the road.

That's the old DEC building, isn't it?


Like this comment
Posted by araj turos
a resident of Barron Park
on Apr 22, 2011 at 12:16 pm

Downtown may be thriving, but the Research Park seems to be faltering. staggering. The office buildings at 3201/3251 Hillview have been empty for more than 5 years. There would be more empty places if it weren't for Stanford itself who seems to be using an increasing number of them for some of its administrative offices.


Like this comment
Posted by Crescent Park Dad
a resident of Crescent Park
on Apr 22, 2011 at 2:05 pm

I worked in that building for a start up back in 90's. Great location. I had an office with a balcony facing Alma and the train tracks. Loved it at the time.


Like this comment
Posted by Follow-the-Money
a resident of Another Palo Alto neighborhood
on Apr 22, 2011 at 2:07 pm

> That's the old DEC building, isn't it?

Yes.


Like this comment
Posted by Anonymous
a resident of another community
on Apr 22, 2011 at 2:43 pm

So the 100 Hamilton was sold by Embarcadero Capital Partners whose top officer and Principal is John Hamilton.
Hopefully he makes a substantial donation to the San Mateo County Community Colleges Foundation where he is a member of the board.


Like this comment
Posted by Moi
a resident of Another Palo Alto neighborhood
on Apr 22, 2011 at 5:51 pm

atrium + atrium = atria


Like this comment
Posted by Paul
a resident of Downtown North
on Apr 22, 2011 at 8:41 pm

'"The downtown Palo Alto location provides a high image and visibility along with great access to local dining and shopping," the seller said in a description of 100 Hamilton.'

Hopefully the buyer only be renting the building. There's a great difference between "great access to local dining and shopping" and "access to great local dining and shopping." After spending $64 million I doubt the buyer will consider the latter to be the case.


Like this comment
Posted by Surprised
a resident of Another Palo Alto neighborhood
on Apr 22, 2011 at 9:31 pm

I'm surprised by the negative comments. There is nothing bad about this transaction in terms of impact on the city, and the city makes more money. What's not to like?


Like this comment
Posted by Development
a resident of Old Palo Alto
on Apr 23, 2011 at 3:28 pm

A Facebook, Myspace, Playlist, & now Zynga titian just bought the highest priced house in palo alto, $8.595, just blocks from downtown. They love Palo Alto & love to locate their companies in downtown palo alto.


2 people like this
Posted by Follow-The-Money
a resident of Another Palo Alto neighborhood
on Apr 24, 2011 at 9:49 am

> What's not to like?

This unrealistic price will be used to raise the apprised value of surrounding properties. This means that the cost of doing business in downtown Palo Alto will go up accordingly, since all costs of doing business must be paid for in terms of the prices of goods and services that downtown business must charge their customers.

Dining in downtown is now prohibitively expensive for people on fixed incomes, like seniors. In short, downtown has been taken away from Palo Alto residents who are not actively employed in high-paying Silicon Valley industry jobs, and turned over to mostly non-residents whose only concern for Palo Alto is "what's in it for me"?

One of the real problems that Silicon Valley has is "pricing itself out of the market". Obscene property prices is one of the main reasons for moving one's business to China, or India. Sooner or later this $64M building is going back on the market at a far less price than the owner paid for it.

> What's not to like?

Just about everything.


Sorry, but further commenting on this topic has been closed.

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