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Tarlton Properties and Principal Real Estate Investors add 217k sf Facility to Their Menlo Park Portfolio

2/02/15

A 217k sf, NoCal distribution facility was acquired by Tarlton Properties Inc (TPI) and Principal Real Estate Investors in a recent $36 mil ($166/sf) purchase. The building, located at 1315 O’Brien Dr, within Menlo Business Park in the city of Menlo Park, is occupied by OfficeMax.

The two-story structure was originally built in 1987 by and for Boise Cascade Office Products. Boise Cascade was subsequently sold to OfficeMax, which was recently merged with Office Depot.

TPI plans to transform the property after acquisition, creating two truly unique buildings in the sub-market: a 140k sf Class A life science facility which will be built out to include dramatic architecture, abundant natural light, plentiful indoor and outdoor amenity space, topped by a rooftop terrace and conference center; as well as a 70k sf, Class A distribution facility. The acquisition and planned redevelopment adds to an existing 1.2 msf portfolio, where similar upgrades are planned.

The brokers for OfficeMax were Mike Sidney and John H. McManus of Cushman & Wakefield.

Menlo Business Park (MBP) is home to a variety of companies that range from start ups thriving at Menlo Labs, to established life science/biotech companies. MBP has benefited from the recent shift of the biotech epicenter south towards Stanford University, where life science patent generation is second only to the Harvard/MIT area.

As Stanford continues to invest in its medical center, new life science patent generation in Silicon Valley is likely to surpass that of the Boston Area. MBP is poised to capture demand for the unique space required to transform these academic pursuits into thriving start-up companies.

TPI and Principal Real Estate Investors have previously partnered on numerous projects ranging from the original development of MBP, to value-add asset turnarounds, to a currently active joint venture to acquire older industrial buildings just outside MBP and reposition them to be life science buildings. Principal Real Estate Investor’s reinvestment in MBP is intended to build on the success of this current joint venture in life science buildings.

Capitalizing on the region’s need for incubator space, TPI recently developed Menlo Labs, two buildings in the Park dedicated to enhancing and enlarging the pool of space available for early stage life science companies to root and grow. Menlo Labs is unique in that companies can lease a single small lab (as small as 250 sf) on a month-to-month basis. Principal Real Estate Investor’s investment provides the capital necessary to continue expansion of the Menlo Labs concept, as well.

MBP’s original tenants were largely light electronic assembly and leaders in their respective fields: Cisco Systems, ETAK, Sony Electronics, and Ericsson, among others. MBP has always responded to market needs, and over the last 15 years has transitioned to mostly life science, with some green tech, clean tech and a few electronics firms. Today, MBP’s largest tenant is Acclarent, a successful medical device manufacturer and division of Johnson & Johnson. Other significant tenants include: Intersect ENT, another medical device manufacturer; Circuit Therapeutics; Kateeva; Auxogyn; and, NVS Technologies.






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