Visa’s Palo Alto office bought in $138M deal
Buyers pay record $2,165 per square foot for building
PALO ALTO >> A new Palo Alto office building occupied by Visa has been bought in an all-cash deal that indicates real estate investors hunger for Silicon Valley commercial properties.
Investors bought the building, at 385 Sherman Ave. in Palo Alto’s California Avenue business district, for $138 million, according to Santa Clara County property records.
Public records show the buyer, SVF Sherman Palo Alto, is associated with a Carlsbad-based entity called Ryan LLC.
The purchase appears to be the most expensive commercial real estate deal in Santa Clara County so far in 2018. The acquisition of the 64,000-squarefoot building was completed Thursday.
The buyers paid an eye-popping $2,165 per square foot for the building, which was completed in 2016.
The building’s only occupant is a Visa research and development unit dedicated to digital commerce products and services.
San Francisco-based Visa announced in July 2016 that it would be moving into the building. At
the time, it described the activities planned for the building as “a combination of office and collaboration spaces for approximately 300 Visa employees focused on technology research, business intelligence, data security and merchant solutions.” Visa also said the site would fit into a widening strategy for the financial services and electronic commerce behemoth.
“We continue to expand our research and development capabilities globally and are investing in facilities that enable our teams to collaborate in the creation of digital commerce solutions,” said Rajat Taneja, Visa’s executive vice president of technology.
Visa’s three-story building is a short distance from dining and drinking establishments, including The Counter hamburger restaurant, Pastis French
restaurant, Joanie’s Cafe, Cafe Pro Bono, Palo Alto Sol, Anatolian Kitchen and La Boguedita del Medio. It’s also near Stanford University and the California Avenue Caltrain Station.
These are the sorts of amenities that tech companies often seek to dangle in front of workers they want to recruit or retain.
“Our new Palo Alto office allows us to draw on the diversity of the Bay Area talent pool and build an even stronger connection with the Silicon Valley community of data scientists, engineers, entrepreneurs,” Taneja said.
Over the one-year period that ended in September, Visa generated $18.36 billion in revenue and captured $6.47 billion in profits. Visa is the sort of tenant likely to attract realty investors.
“The investors are buying the rental income almost irrespective of the price because of Visa’s credit,” Erik Hallgrimson, an executive managing director with commercial realty brokerage Cushman & Wakefield, said Friday.
Project developer Daniel Minkoff added numerous trees, a deck, artwork and a setback profile for the third floor to make the building more attractive to prospective tenants and neighborhood residents.
“This building is a showpiece for Visa in a great area of the South Bay,” said Chad Leiker, a first vice president with commercial realty brokerage Kidder Mathews. “It’s a crazy high price, but when you have a credit tenant like Visa in there, you can expect this type of thing to happen. There is still a lot of money looking to buy property in Silicon Valley.”