Vacant Silicon Valley Campus Hits Market
Pharmaceutical giant Roche is marketing the leasehold interest in its soon-to-be vacant Silicon Valley campus, which could attract bids of about $400 million.
The 966,000-square-foot office and lab complex is in Stanford Research Park in Palo Alto, Calif.
Roche is in the process of consolidating its operations in space occupied by Ventana Medical Systems, which Roche acquired last year. It will be completely out of the sprawling Palo Alto property before a sale closes.
Roche's broker, Cornish & Carey, is pitching the property both to end-users and high-yield investors. Comparable properties in Stanford Research Park have traded at $500/sf and up in recent years. But Roche's property could trade for significantly less - about $415/sf - because a high-yield investor would have to lease it up and negotiate an extension of the ground lease.
The complex is made up of 17 buildings constructed in phases on a 70-acre site from 1964 to 1989. The buildings range from 1-3 floors. About one-third of the space is currently set up for use as laboratories, but could be converted to traditional office space.
As with all of the 10.1 million sf of space in Stanford Research Park, Roche's campus is subject to a ground lease from Stanford University. That lease extends to 2036. A high-yield investor would likely want to negotiate an extension to make the property more attractive at re-sale.
Roche has instructed Cornish & Carey to identify prospective tenants in the meantime. Having leasing agreements for at least some of the space in place would drive up offers from bidders that don't intend to occupy the property themselves.