Equity Office Drops Redwood Shores Rents; Highlights Trend

After Blackstone took over Equity Office in 2007, it quickly began raising asking rents at most of the office parks and buildings it acquired through the acquisition. Equity Office had a significant presence in Redwood Shores, where it owns numerous Class A assets on Shorebird, Twin Dolphin, and Redwood Shores Parkway. From the time Blackstone acquired Equity Office, tenants and brokers saw asking rents go from under $3.00 full-service, all the way up to over $5.00 full-service at some of its Redwood Shores properties.

We previously wrote a post where we specifically called out EOP’s asking rents in this submarket as being artificial, but now it is official. Since October, Equity Office has cut asking rates at its Redwood Shores’ projects by 25-30%. For instance, asking rates in October of last year at 201-203 Redwood Shores Parkway were $5.15 psf/month, fully-serviced. Today, they are $3.65. At 333 and 555 Twin Dolphin, they are now $3.25 full-service, about 25% lower than they were about one quarter ago, and at 255-275 Shoreline, they are back down to $2.95 full-service, representing a similar drop from their highs.

Interested in doing a neat exercise? Drop your rents on a proforma by 25% and see what happens to your IRR.

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