Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp. a California licensed real estate broker, California License Number 01385740 (“HFF”) HFF has been engaged to extend to qualified investors the opportunity to acquire the 100% fee simple interest in 490 South California Avenue (the “Property” or “490 California”), a four-story, steel-framed Class A office building with premier ground floor retail located in the heart of Silicon Valley in the California Avenue submarket of Palo Alto, California.
The 87.1% leased asset is prominently situated at the intersection of California Avenue and the El Camino Real Corridor, adjacent to Stanford Research Park and Stanford University.
The Property offers unparalleled views of the Stanford Hills and features an abundance of walkable retail amenities including direct access to the California Avenue Caltrain stop.
PROPERTY SUMMARY
490 S. California Avenue Property Address CALIFORNIA Palo Alto, CA represents Size 23,868 sq. ft. a generational opportunity to
Percent Leased 87.1% acquire a core-quality office/retail asset in one of the most sought In-Place Rents $5.28 NNN Market Rents $6.23 NNN after submarkets in the country, Percent Below Market providing an investor stable in- 24% Upon Lease Expiration place cash flow, balanced lease Year Built 1985 Year Renovated 2008 rollover and potential upside from Parking Spaces* 30 spaces rents approximately 24% below Ratio 1.1 / 1,000 market upon expiration.
Site Area 0.33 acres
Assessor’s Parcel # 124-32-046
*surface / subterranean
2 Iconic Core Class A Office Building with Premier Location Offering Proximity to Desirable Affluent Communities in Surrounding Area Sweeping Views of the Stanford Hills Stanford University & Stanford Research Park Located a short drive to some of the most affluential communities Institutional-quality asset located in the Directly adjacent to Stanford Research Park and in the Bay Area heart of Silicon Valley with 360-degree only a 5-minute walk to Stanford University views of Palo Alto and the Stanford Hills Caltrain-Served Downtown Core Office Space in High Demand Direct Access to Executive Housing Corridor, Rare Institutional Quality Fee-Simple Just a 5-minute walk to the California Avenue Caltrain stop with Major Transportation Arterials & direct access to San Francisco and Silicon Valley Investment Opportunity World Class Amenities 100% fee-simple acquisition opportunity in In close proximity to Palo Alto’s world renowned Worldwide Epicenter of Technology & Innovation Palo Alto retail core; a short drive to Interstate 280 and the 48% of all U.S venture capital investments made in the Bay Area – surrounding executive housing corridor more than 4.6x that of any other region in the country
HIGH-PROFILE CORPORATE NEIGHBORS
Tibco Frank Rimmerman Corning
Theranos Lockheed Martin
Cooley LLP Hewlett-Packard PAGE MILL ROAD
Sidley Austin LLP Cloudera Morgan Stanley Morrison Foerster LLP Sutter Hill Ventures Simpson Thatcher & Bartlett Genencor Machine Zone Bingham Greenebaume Doll CALTRAIN Paul Hastings EL CAMINO REAL Wilmer Hale Wilson Sonsini Goodrich Google Merck ALMA STREET Wilson Sonsini Goodrich King & Spalding
Ability to control one of Palo Alto’s most desirable,
Yelp highly-visible retail corners, located along El Camino Real at the entrance of the California Avenue corridor.
Tableau Software
CALIFORNIA AVENUE
CALIFORNIA AVENUE
3 INVESTMENT HIGHLIGHTS
Iconic Core Class A Office Building with Sweeping Views of the Stanford Hills
490 California is an irreplaceable, core-quality office building that is appealing to a vast array of tenants due to its prominent location with sweeping views of the Stanford Hills, STANFORD UNIVERSITY proximity to major transportation corridors, walkable amenities and rare underground parking. Situated in a high-barrier-to-entry market with strong economic fundamentals, low single-digit vacancy rates, and substantial rental growth projections. Located at the epicenter of Silicon Valley with direct access to a high concentration of executive housing in Atherton, Palo Alto, Palo Alto Hills, Los Altos Hills, Portola Valley, Woodside, and Hillsborough. Located within walking distance of the California Avenue retail core and California Avenue EL CAMINO REAL Caltrain stop. Rare on-site parking in addition to a two-level city parking structure adjacent to the STANFORD RESEARCH PARK Property. Long-term, net-leased to a CALIFORNIA AVENUE diverse tenant roster at below market rents.
Steel-frame construction with substantial building renovations completed in 2008.
4 Rare Institutional Quality Fee-Simple Investment Opportunity
Top Performing Palo Alto Submarket: The California Avenue submarket In the past ten years, there have only been nine institutional office building sales maintains an overall occupancy of 96.0% as of fourth quarter 2014 and greater than 20,000 square feet in the Downtown Palo Alto/Middlefield Corridor/ Class A asking rents of $6.17 psf/mo. NNN. Sand Hill submarkets, a testament to the long-term ownership in the area and the rare opportunity 490 California presents to acquire a high-quality asset in the Palo Alto - Submarket Overview submarket. Total Under Total Class A Asking Inventory Construction Vacancy Rate Rent (NNN) The California Avenue submarket in particular California Avenue 976,461 45,472 3.96% $6.17 features just three properties greater than 20,000 There have been just five Downtown 2,240,862 66,979 4.76% $7.14 square feet built in the past 20 years. comparable fee-simple Stanford Research Park 3,018,661 86,925 6.01% $6.38 Class A properties that Bayshore 1,527,074 - 9.45% $3.45 Additionally, 490 California offers the unique East Palo Alto 458,565 - 11.11% $4.93 ability to acquire a 100% fee simple interest have sold on Caltrain in PALO ALTO - TOTAL 8,221,623 199,376 6.35% $5.98 directly adjacent to the Stanford Research Park, the past decade which is comprised of solely leasehold properties.
Limited Class A Space on the Market: Currently, there are only three Year % Sale Buyer availabilities in the California Avenue submarket for tenants seeking Class Property City Built Size (SF) Leased Date Seller A office space of 2,500 to 5,000 sq. ft. 2882-2884 Menlo 1987 / 133,000 100% Dec-14 Invesco Sand Hill Rd Park 2012 Significant Tenant Demand: Silicon Valley is experiencing record levels of Clarion tenant demand with office tenants in the market seeking approximately 17 49% Interest million sq. ft. of space. 200 Middlefield Menlo 2012 41,933 100% May-14 TIAA-CREF Rd Park Menlo Equities Tenant Demand - Silicon Valley 130 Lytton Ave Palo Alto 1984 50,000 100% Nov-13 Rockwood Capital / Tarlton Q2 2005 - Q2 2010 Q3 2010 - Q4 2014 Properties 7.8 million sq. ft. average tenant demand 11.2 million sq. ft. average tenant demand Kenson Ventures 18,000,000 550 Hamilton Palo Alto 1971 35,678 96% Aug-13 CM Capital Ave Private
15,000,000 2400-2498 Menlo 1975 / 206,000 82% May-11 DivcoWest / PSP Sand Hill Rd Park 2005 Kaiser Family Foundation 49% Interest 12,000,000 100 Hamilton Palo Alto 1983 / 71,803 100% Mar-11 RREEF Ave 2005 Embarcadero Capital
9,000,000 321 Middlefield Menlo 1968 / 48,397 100% Nov-06 Pollock Financial Group Rd Park 2007 Allstate Insurance
6,000,000 310 University Palo Alto 1912 / 26,160 100% May-04 Premier Properties Ave 1993 Management Private Group 3,000,000 Q2 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 Q1 2008 Q2 2008 Q3 2008 Q4 2008 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 1024 Q3 2014 Q4 250 University Palo Alto 1990 41,428 100% Nov-03 Inspire Real Estate Holdings Ave Hewlett-Packard
5 Direct Access to Executive Housing Corridor, Major Transportation Arterials & World Class Amenities
490 California is located directly off of El Camino Real and a short distance to Interstate 280, providing direct access to the nearby executive HILLSBOROUGH housing corridor. This stretch of communities including Monte Sereno, Los Altos, Los Altos Hills, Palo Alto Hills, and Portola Valley features HILLSDALE some of the most affluent communities in the Bay Area and includes executives seeking low commute times.
Caltrain: Caltrain is a commuter rail line that Stanford Shopping Center: With 140-plus stores, dozens of stretches from San Francisco to the north and restaurants and coffee shops, and public art by nationally acclaimed Gilroy to the south. The rail system is comprised artists, the open-air Stanford Shopping Center is considered one of of 32 stations, with 29 served daily, two weekend- the top shopping centers in the country. The Center features award- only stations, and one football-only station located ATHERTON winning gardens, a European-style street market, and 1.3 million at Stanford University. Trains leave San Francisco square feet of premier retail space. Located conveniently off El multiple times every hour and the Baby Bullet can Camino Real near Downtown Palo Alto and Stanford campus, the make the 32-mile commute between San Francisco Stanford Shopping Center serves the nearby affluent communities of and the Palo Alto Caltrain Station in less than 39 MENLO PARK Palo Alto, Menlo Park, Woodside, and Atherton. minutes - and only 48 minutes to the California Avenue stop via the Limited-Stop train. Downtown Palo Alto: In addition to the world-renowned Stanford Shopping Center, Palo Alto features a vibrant downtown shopping California Avenue Corridor: Major Palo Alto district, a popular shopping and restaurant district centered around thoroughfare connecting the Property to the Caltrain California Avenue just south of the Stanford campus, and Town & station, while offering a multitude of walkable Country Village, a specialty center on El Camino Real across from amenities. This desirable retail corridor features a Stanford Stadium. Visitors will find cafés and a wide variety of variety of restaurants, coffee shops, bars, a farmer’s restaurants in all four shopping areas, as well as in neighboring market, banking, and other services. Downtown Menlo Park and Downtown Mountain View.
Desirable Affluent Communities in Surrounding Area
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.
DEMOGRAPHICS SUMMARY City % Bachelors Degree or Higher * Median Household Income Atherton 84.20% $228,400 Hillsborough 73.50% $228,000 Los Altos Hills 84.20% $196,500 Menlo Park 69.20% $113,800 Palo Alto 79.50% $122,500 Woodside 69.70% $212,700 *25+ Yrs of Age
6 OAKLAND SAN FRANCISCO OAKLAND INTERNATIONAL AIRPORT
SAN FRANCISCO INTERNATIONAL AIRPORT
HILLSDALE BELMONT San Francisco Bay SAN CARLOS
REDWOOD CITY
ATHERTON
MENLO PARK
EL CAMINO REAL
DOWNTOWN PALO ALTO STANFORD SHOPPING CENTER PALO ALTO PALO ALTO
CALTRAIN
STANFORD UNIVERSITY
CALIFORNIA AVENUE PAGE MILL ROAD
CALIFORNIA AVENUE CALIFORNIA AVENUE RETAIL CORRIDOR
STANFORD RESEARCH PARK
EL CAMINO REAL
CALIFORNIA AVENUE
7 Caltrain-Served Downtown Core Office Space in High Demand
Caltrain-served downtown submarkets have seen significant tenant demand as more users are seeking a walkable Caltrain-served amenity-base with direct access to public transportation options. submarkets outperform Overall occupancy for all core Silicon Valley downtown submarkets is currently 94.7%. surrounding areas as Lack of availabilities in the downtown submarkets provides for higher tenant retention rates due to limited relocation alternatives. well as the overall market Located just a quarter mile to the California Avenue Caltrain station providing for direct access to San Francisco in just 48 minutes.
Premier Location Offering Proximity to Stanford University & Stanford Research Park
505
2450 2470 490 California is adjacent to 2500 STANFORD RESEARCH PARK 2600
601 x EL x
x 2700
777 x x
Stanford University, one of x
x
x x
855 x
x CAMINO
x x The Stanford Research Park is comprised of 700 the most prestigious research 901
CALIFORNIA975 AVE. 3000 650 Acres and includes 162 buildings with approximately
universities in the world. It is known for its entrepreneurial 3128 3150 835 REAL 755 845 3200
1117 950 25,000 employees working for more than 150 WY 600-660 character and its relationship to Silicon Valley. Venture 3300
925 611 975 companies. HANSEN 607 capitalists are drawn to Palo Alto due to its proximity to 700 2400 2475 HANSEN 850 811 1050 2625-31 1 1001 Stanford University and its unparalleled commitment to 451 HANOVER 900 1290
2550 2675 WY x 3075 2626 Established in 1951, the Research Park is almost 2670 1501 3100 2690
fostering entrepreneurs and startups. 911 16
01 3130 1450-14541400 3120
3000 ST completely owned by the Board of Trustees of the 1500-1530 3140 Student enrollment of 6,980 undergraduates and Leland Stanford Junior University, with extremely RD 3175 limited fee-simple opportunities. 8,897 graduates with 97% of undergraduates residing 3200
1501
ST3251 on campus MILL The desirability of Stanford Research Park is Campus consists of 8,180 contiguous acres with PAGE evidenced by its unparalleled market fundamentals 1651 HANOVER including an overall vacancy rate of just 6.0% and nearly 700 major buildings 1661
3350 Class A asking rental rates of $6.38 psf/mo. NNN as 3155 PORTER 3215 3145
2,043 faculty including 22 Nobel laureates as DR of the fourth quarter of 2014. Overall vacancy rates 3201-3251 3150 3165 3221 1701 3200
3240 3210 3183 3305 current members of the Stanford community 3170 3303 in the Stanford Research Park have averaged just 3260
1801-1899 3172 3180 3301 3176 3300
AVE 3160 3307 4.4% over the past 15 quarters.
3174 3330 5,100 externally sponsored research HILLVIEW 3277
3340 3373 FOOTHILL 3351 3375 projects consisting of a $1.35 billion total MIRANDA The Research Park has attracted world-class STANFORD NORTH AVE VA HOSPITAL budget 28 ± Acres technology, research, recruiting, and law-firm 3400 EXPWY.
RD. 13 ± Acres tenants since its inception including Hewlett-Packard,
COYOTE MILL
$18.7 billion endowment HILL AVE 3333 3401 General Electric, Lockheed, Wilson Sonsini, Cooley RD
PAGE 16 ± Acres LLP, Morrison & Foerster, Merck Sharp & Dohme, 4001 4005 3406
- HILLVIEW STANFORD NORTH 3408 4009 Robert Half, VMWare, and Gibson, Dunn & Crutcher. 52 ± Acres 4015
COYOTE HILL 3410 37 ± Acres 3421
3412
x Stanford Research Park has long been known as
18 ± Acres x 3431 a preferred location for the top law firms in the
DEER 3420 3440 CREEK 5 ± Acres
3450 country with 27 of the top 100 law firms maintaining ARASTRADERO RD
RD 900 3475 a location there. 3460
3500 1050
1070
3495
STANFORD SOUTH 158 ± Acres 8
280 OCCUPANCY FOR HISTORICAL OCCUPANCY SPREAD BETWEEN DOWNTOWN SOUTH PENINSULA SUBMARKETS DOWNTOWN CORE & TOTAL MARKET OCCUPANCIES 100% 100% The downtown core is currently outperforming previous cycles due to tenant demand requiring walkable amenities and access to Caltrain. 95% 95% 2.9%
90% 90% 3.5% 6.2% 5.3%
85% 85%
Market occupancy dipped below 90% due to Facebook ougrowing Downtown Palo Alto and subsequently moving out of the market. 80% 80% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q4 2005 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Downtown Core* Total Submarket Palo Alto Peer Set (RWC-MP-MV)*
*Peer set includes Redwood City, Menlo Park and Mountain View *Includes historical occupancy for Redwood City, San Mateo, Menlo Park, Palo Alto, and Mountain View submarkets
CALIFORNIA AVENUE CALTRAIN
5-minute walk to / from the Caltrain station
CALIFORNIA AVENUE
CURRENT OCCUPANCY - 4Q 2014 Redwood City 93.9% Palo Alto 95.2% EL CAMINO REAL Mountain View 94.4% Menlo Park 95.2% TOTAL OF ALL DOWNTOWN SUBMARKETS 94.7%
9 10 Worldwide Epicenter of Technology & Innovation
The Palo Alto market has pursued a path of continuous growth, responding VENTURE 50% CAPITAL to the constant demand of the ever-changing landscape of high-technology 45% advancement, gaining international recognition as the epicenter of technology INVESTMENT and innovation. SILICON VALLEY 40%
490 California is ideally positioned in close proximity to venture capital and 35%
a highly educated workforce, providing an innovative landscape with surety 30% of human capital and wealth creation. 25% In 2014, 48% or $23.4 billion of total U.S. venture capital investments were
made in the Bay Area, more than 4.6x that of any other region in the country 20% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 representing 86% growth year-over-year, up from $12.6 billion in 2013. *Represents percentage of total U.S. investments
11
STEVEN GOLUBCHIK BEN BULLOCK JOHN SIMERLEIN JOSH DISALLE Senior Managing Director Director Director Real Estate Analyst 415.276.6083 415.276.6927 415.276.6947 415.276.6088 [email protected] [email protected] [email protected] [email protected] CA Lic. #01712816 CA Lic. #01885337 CA Lic. #01734564 CA Lic. #01945367
BRUCE GANONG JORDAN ANGEL Senior Managing Director Director 415.276.6940 415.276.6942 [email protected] [email protected] CA Lic. #01332792 CA Lic. #01419993
100 California Street, Suite 720 San Francisco, California 94111 415 276 6300
©2015 HFF and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 23 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial 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 we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references 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 buyer. Buyers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.