PALO ALTO, CALIFORNIA - LoopNet...PALO ALTO, CALIFORNIA SUBJECT PROPERTY FOR SALE OFFERING...

375 PA L O A LT O , C A L I F O R N I AFOREST AVENUE

SUBJECTPROPERTY

FOR SALEOFFERING MEMORANDUM

STEVE HENRY 650.473.4763 [email protected] CA RE License #01342975

RANDY GABRIELSON [email protected] CA RE License #00937630

CHRISTIAN PRELLE650.688.8504 [email protected] CA RE License #01888351

OFFERING MEMORANDUM

375 PA L O A LT O , C A L I F O R N I A

STEVE HENRY 650.473.4763

RANDY GABRIELSON 650.688.8511

CHRISTIAN PRELLE650.688.8504

PPPPPPPPPPPPPPPPPPPPPPAAAAAAAAAAAAAAAAAAAAAAAAAA LLLLLLLLLLLLLLLLLLLLLLLLLLLLL OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO AAAAAAAAAAAAAAAAAAAAAAAAAA LLLLLLLLLLLLLLLLLLLLLTTTTTTTTTTTTTTTTTTTT OOOOOOOOOOO ,,,,,,,,,,,,,,,, CCCCCCCC AAAAAAA LLLLLL IIIII FFFFFFF OOOOOOO RRRRRRR NNNNNNNNNNNNNNNNN IIIIIIIIIIIIIIIIIIIII AAAAAAAAA

I. Executive Summary Investment Highlights

II. Property Information

III. Lease Summary/Income

IV. Floorplans

V. Market Overview

VI. Area Overview

VII. Aerial/Amenities Map

This is a confi dential memorandum intended solely for your own limited use to determine whether you wish to express interest in the pur-chase of the subject property. This memorandum contains selected information pertaining to the described property and has been prepared primarily from information supplied by the Seller and Newmark Cornish & Carey, agent for the Seller. This memorandum does not purport to be all-inclusive nor to contain all of the information which a prospective investor may desire. Neither the Seller nor any of their employees, or agents, including Newmark Cornish & Carey, makes any representation or warranty, expressed or implied, as to the accuracy or completeness of this confi dential memorandum or any of its contents, and no legal liability is assumed or to be implied by any of the aforementioned with respect thereto. By your receipt of this memorandum, you agree that the information contained herein is of a confi dential nature, that you will not, directly or indirectly, disclose or permit anyone else to disclose this memorandum or any part of the contents to any other person, fi rm or entity without prior written authorization of Seller or Newmark Cornish & Carey, nor will you use or permit to be used this memorandum or any part of the contents in any fashion or manner detrimental to the interests of the Seller.

The Seller expressly reserves the right, at its sole discretion, to reject any or all proposals or expressions of interest in the subject property and to terminate discussions with any party at any time with or without notice.

TABLE OF CONTENTS

15-1617•03/17



CHRISTIAN PRELLE650.688.8504 OFFERING MEMORANDUM


EXECUTIVE SUMMARY

Newmark Cornish & Carey, as the exclusive marketing advisor, is pleased to present the opportunity to acquire a condominium located at 375 Forest Avenue (the “Property”), a street level offi ce condominium totaling ±5,387 rentable square feet. The property is located on Forest Avenue in the heart of Downtown Palo Alto, Silicon Valley’s Premier Offi ce Market.

INVESTMENT HIGHLIGHTS

Excellent Location - The Property is situated in the prestigious submarket of Downtown Palo Alto and has easy freeway access to US Route 101 as well as Interstate 280 via Sand Hill Road, which are the two major north and south arteries servicing the mid-Peninsula, north to San Francisco and south to San Jose. Additionally, the building’s desirable location is walking distance to Stanford University, two blocks from Palo Alto’s famed University Avenue, and provides tenants with access to Caltrain, the Silicon Valley’s primary commuter line. Countless amenities such as: Restaurants, Shopping, and Nightlife service the building and are within walking distance. The surrounding area includes headquarters for many of the most prominent venture capital, technology, and professional service companies in the world.

Stable Rental History - The Property has been occupied since 2003-2016 by the same tenant (owner/user occupied) and was recently leased for a 62 month term to Scaled Inference, Inc.

Venture Capital - Palo Alto’s proximity to the largest concentration of venture capital fi rms in the world feeds an environment of unmatched creativity and innovation and is precisely why Palo Alto is the most sought after location not only in the Bay Area, but by companies large and small around the globe. Silicon Valley receives over one-third of all venture capital funding nationwide and as a result Palo Alto has become ground zero for the most prestigious professional fi rms and technology companies.

OFFERING SUMMARY

Total Rentable SF: ±5,387

Number of Buildings: One Condominium

Address: 375 Forest Avenue, Palo Alto, California

Year Built: 1981

Price: $8,080,050

Year 1 Cap Rate: 6%





PROPERTY OVERVIEW

The 375 Forest Avenue condominium is one of four commercial condominiums on the ground fl oor. The building has a total of four fl oors, with fl oors 2-4 residential. 375 Forest Avenue has a fl exible fl oorplan that contains a kitchen, private outdoor atrium with a sitting area, men’s and women’s restrooms, kitchen and a mix of private offi ces and conference rooms. Recently renovated interiors including polished concrete fl oors, give the space a modern, open look that is desirable to a large, diversifi ed tenant base.

THE OPPORTUNITY

375 Forest Avenue is ideally suited for an investor looking to own Real Estate in the Bay Area’s most sought after submarket. 375 Forest Avenue has great intrinsic value given the location. The downtown Palo Alto offi ce market boasts some of the lowest vacancy rates in the country and strongest leasing fundamentals (vacancy rates below 6%, and average asking rents of $8.59 NNN as of Q4 2016).

The asset at 375 Forest Avenue off ers investors a rare opportunity to acquire an offi ce condominium in one of the most prominent, renowned, and active submarkets in the Bay Area that is walking distance to the Caltrain Station and ample municipal amenities creates an ongoing dynamic that is attractive to tenants and will keep 375 Forest occupied. The current tenant has a new 62 month lease that commenced October 2016.

OFFERING MEMORANDUM





Location: 375 Forest Avenue Palo Alto, California

Year Built: 1981

Parcel Map: APN# 120-62-002

Gross Building Area: ±5,387 Square Feet

Stories: Four (4) story Subject condominium on fi rst fl oor/street level

Zoning: CD-C Zoning

Cross Streets: Gilman Street and Waverly Street

Interior Improvements: 6 private offi ces; 1 executive glass conference room and one small conference room; walk-in kitchen with a sit down eating area; Men’s and Women’s restroom; Outdoor private atrium seating area

PROPERTY INFORMATION

OFFERING MEMORANDUM





Period Rent/SF/Mo. Base Monthly Rent

3% Management

Fee

Annual Base Rent

Annual Management

Fee

October 1, 2016 - December 15, 2016 (Months 1 - 2.5) $0.00/SF/NNN $0.00 $0.00 $0.00 $0.00

December 16, 2016 - September 30, 2017 (Months 2.6 - 12) $7.50/SF NNN $40,402.50 $1,212.08 $383,823.75 $11,514.71

October 1, 2017 - September 30, 2018 (Months 13 - 24) $7.73/SF NNN $41,641.51 $1,249.25 $499,698.12 $14,990.94




Effective Rent: $7.68 $2,564,696.83 $76,940.90

Notes:

CAP rate of 6% (going in CAP rate)

Irrevocable Letter of Credit: $135,000 (the “Letter of Credit”)

3% annual increases

62 month lease term

Lease commencement: October 1, 2016

Lease Expiration: November 30, 2021

Tenant Option to Extend: 3 year option – Tenant to deliver written notice to Landlord no more than twelve months and no less than 9 months from the end of the initial term. The option rent shall be at “fair market value”.

TENANT NAME: Scaled Inference, Inc.

LEASE SUMMARY/INCOME

OFFERING MEMORANDUM





FLOORPLAN

OPEN AREA

OPEN AREA

FOREST AVENUE

GIL

MA

N S

TR

EE

T

OFFERING MEMORANDUM





MARKET OVERVIEW

THE PALO ALTO OFFICE MARKET

Palo Alto is located on the northwest corner of Santa Clara County. The city is the celebrated home of Stanford University, one of the nation’s most renowned Universities. Palo Alto is also known as the home of Silicon Valley’s premier professional services fi rms, including international law fi rms, investment bankers, and venture capital fi rms. Palo Alto serves as the headquarters for some of Silicon Valley’s leading high-technology companies including Hewlett-Packard, VMware, Tesla Motors, Varian Medical, SAP, IDEO, Palantir Technologies and Disney.

The downtown Palo Alto submarket remains one of the most prestigious offi ce markets in the world. As of the fourth quarter of 2016, the total inventory is ±1,467,067 square feet of offi ce space. The overall vacancy rate is under 6%, with average asking rents of $9.44 NNN for offi ce space. A key factor to the strength of this market is the very low turnover rate among tenants. The market supply is extremely constrained.

PALO ALTO OVERVIEW

The City of Palo Alto is a California charter city located in Santa Clara County, in the San Francisco Bay Area of California, United States. The city shares its borders with Mountain View, Los Altos, Los Altos Hills, Stanford, Portola Valley, and Menlo Park. It is named after a redwood tree called El Palo Alto. As of the 2010 census, the city had a total population of 64,403 residents.

City Inventory (SF) Vacancy Rate (%) Availability (SF)

Gross Absorption

(SF)

Net Absorption

(SF)

Rental Rates Asking (NNN)

Overall Direct Sublease Overall Direct Sublease

Downtown Palo Alto 2,392,963 5.9% 2.75% 2.38% 141,118 65,915 75,203 38,237 (14,157) $8.59

OFFERING MEMORANDUM





AREA OVERVIEW

PALO ALTO OVERVIEW

Palo Alto serves as a central economic focal point of the Silicon Valley and is home to more than 7,000 businesses employing more than 98,000 people. Many prominent technology fi rms reside in the Stanford Research Park near Page Mill Road, while nearby Sand Hill Road in the adjacent city of Menlo Park is a notable hub for venture capital fi rms. The city’s economy generally leads the economic trend for the rest of the Silicon Valley.

Well-known companies and research facilities headquartered in Palo Alto include:• Amazon.com’s A9.com• Aricent• Cloudera• CPI International• Flipboard • Hewlett-Packard• Houzz• IDEO• Medallia• MetricStream • Nanosys[23]• Nest Labs• PAIX• Palantir Technologies• Palo Alto Medical Foundation• Palo Alto Research Center• SAP• Socialtext• Space Systems/Loral• Survey Monkey• Tesla Motors• Tibco Software• Theranos• Varian Medical Systems• VMware• Waze• Wilson Sonsini Goodrich & Rosati

Other notable companies with signifi cant presences in Palo Alto include:

• CNF Inc.• EPRI• Genencor (based in Palo Alto)• Lockheed Martin• Merrill Lynch (largest offi ce outside New York)• Posedge Inc• Rave Wireless (founded in Palo Alto)• SAP AG (North American Labs)• Schering-Plough Biopharma• Skype (Microsoft)• The Wall Street Journal

In addition, Palo Alto has a lively retail and restaurant trade. Stanford Shopping Center, an upscale open air shopping center established in 1955, and Downtown Palo Alto (centered on University Avenue) are popular eating venues and shopping destinations.




375 PA L O A LT O , C A L I F O R N I A

UNIVERSITY AVE

UNIVERSITY AVELYTTON AVE

LYTTON AVE

HAMILTON AVE

HAMILTON AVE

FOREST AVE

FOREST AVE

ALMA ST

ALMA ST HIGH STHIGH ST

EMERSON ST

EMERSON ST

RAMONA ST

RAMONA ST

BRYANT ST

BRYANT ST

WAVERLEY ST

WAVERLEY ST

375 Forest

AERIAL MAP




550 HAMILTON AVENUE 6STANFORD

STANFORDSTANFORD

Town & CountryTown & CountryShopping CenterShopping Center

STANFORDShopping CenterShopping CenterShopping Center

Town & CountryShopping Center

Fore

st Av

e

Hamilto

n Ave

Ramona St

Bryant St

Waverly St

Cowper St

2

7

6

8

45

910 11

16

13

17

14

19

15

19

CCowper St

CowCCowper St

Apple Store

Peet’s CoffeeChico’sThe Cheesecake FactoryStarbucksRound Table Pizza

Buca Di Beppo’sPeet’s CoffeeJamba JuiceFleming’sPinkberryPluto’sKanpaiJoyaTaipanNolaDan Gordon’sPampasSt. Michael’s Alley

CaltrainCity Park

Stations

Amenities

2

7

1

6

3

8

4

9

5

10

111213

17

14

18

15

19

16

Stanford Shopping CenterA|X Armani ExchangeAbercrombie & Fitch Ann TaylorAnthropologieApple StoreBanana RepublicBang & OlufsenBCBGMAXAZRIABloomingdale'sBrooks BrothersBrookstoneBurberryCachéCoachCrate & BarrelExpressFretteGapGymboreeJ. CrewJ. JillKate SpadeKiehl's Since 1851Louis VuittonLucyMacy’sNeiman MarcusNordstromPapyrusPottery BarnPottery Barn KidsRalph LaurenSephoraShreve & CoSigona's Farmers MarketSony Styl

e

The Body ShopTiffany & Co.Victoria's SecretWhite House / Black MarketWilliams-Sonoma Home

stAv

e

1

3

12

7891011

Middlefield Rd

HeritagePark

375 Forest

OFFERING MEMORANDUM


AMENITIES

PALO ALTO, CALIFORNIA - LoopNet...PALO ALTO, CALIFORNIA SUBJECT PROPERTY FOR SALE OFFERING...

Documents

Transcript of PALO ALTO, CALIFORNIA - LoopNet...PALO ALTO, CALIFORNIA SUBJECT PROPERTY FOR SALE OFFERING...