Commercial Real Estate Blog

The list below represents the top lease transactions which occurred in Silicon Valley during the second quarter of 2008.

The San Francisco Business Times is reporting that Sequoia Capital has signed up for the top floor of Tishman Speyer’s new tower at 555 Mission Street in San Francisco. The 33-Story, 550,000 SF tower is being built by Turner Construction and is currently seeking LEED certification. It was designed by architecture firms Kohn Pederson Fox and Heller Manus.

Sequoia Capital’s deal for the top floor is reported to be coming in around $80 psf. The firm is a renowned VC with a stellar track record, including investments in YouTube, Google, 3Com, Cisco, and a long list of other successes.

Sequoia is currently headquartered at 3000 Sand Hill Road in Menlo Park and occupies building 4 along with other VC’s Menlo Ventures, Trinity Ventures, and 5AM Ventures. It’s unclear whether it is ditching Sand Hill, where rents have shot up to north of $120 psf range (and in one case to $180 psf) , or is setting up a San Francisco office in the face of the resurging internet/web 2.0 scene in San Francisco. The top floor is 15,000 SF, which generally is a big chunk for an expansion/satellite office, let alone most venture capital firms altogether. Another possiblity is that to get the top floor they needed to take down the entire floor, and will elect to sublease a portion of it.

At the end of the day, chances are pretty skinny that they’re ditching Sand Hill Road.

2180 Sand Hill Road
Menlo Park, CA

This rarely available top floor corner suite features:

• 1,835 SF Office Space
• Excellent Windowline Views
• Easy 280 Access
• Furniture Can Be Made Available
• 3-4 Private Offices, 1-2 Conference Rooms, Server Closet, Reception, Kitchen Area
• Sublease to 12/31/2008; Longer Term Available
• $9.50 NNN/PSF/Month
• For a flyer and floor plan, click here

Cornish and Carey held its annual forecast in Santa Clara this week. Along the lines of what I’ve been writing about, they are predicting rental rates to be static for 2008 for office and R&D, and vacancy rates to remain in a similar state.

The fact is that there is a large amount of new space coming online in 2008. In addition, there remains a fair amount of space available outside of Palo Alto, Menlo Park, Shoreline, and Cupertino submarkets. All of these submarkets will see new buildings come online this year, though no tremendously large projects are slated to dramatically change the landscape. In Sunnyvale however, Menlo Equities, Jay Paul, Sand Hill Property/RREEF JV, and a few smaller projects are bringing online more than 1.5M square feet of space this year alone. That is enough for 7500 employees in a time when most people now see that job growth will also be static if not recessionary this year.

As a result, we believe a portion of the price increases in the past 12-30 months we’ve seen in some of the softer markets outside those indicated above have been in large part a combination of broker hype and new owners paying dear prices for commercial property and being essentially forced to raise rents to make their deals pencil.

I think that while we may not see landlords drop asking rents immediately, smart landlords see the writing on the walls and we’ll see some get more aggressive in making deals.

Menlo Park Office Space - 70,000 SF Class A -$1.75 NNN - Plug N’ Play

Mountain View Office Space - 440,000 SF Class A - Corporate Campus Opportunity

Palo Alto Office Space - 6,800 - 10,300 SF Class A - Downtown Location - Awesome Space

Palo Alto Office Space - 11,000 SF - Downtown Location - Plug N’ Play

San Jose Office Space - 3,000 SF - Class A Office Space - Plug N’ Play

Sunnyvale Office Space - 5,000 SF - Class B R&D - $1.50 NNN