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11/22/16
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Kenson Ventures is about to break ground on a 30k sf office project in Palo Alto’s California Avenue district. Construction of the state-of-the-art, LEED-certified development is slated to start this month with completion planned for 2018.
The project is being financed with $18.5 mil in construction and permanent financing that was arranged by Jim Korinek of CBRE Capital Markets’ Debt & Structured Finance team and funded through a Midwestern life insurance company. The 27-year fixed-rate loan includes a two-year construction period followed by a 25-year permanent loan.
The project, located at 2555 Park Blvd, is within an amenity-rich neighborhood that sits just three blocks from a Caltrain station. The property offers immediate pedestrian access to all of the restaurants and amenities on California Avenue.
The development was designed by Palo Alto-based Fergus Garber Young Architects to accommodate a variety of tenants in a contemporary environment. The flexible design allows for either a high-density technology tenant layout or professional service firm build-out. The property will have numerous amenities including four covered terraces, on-site showers, vehicle charging stations, bicycle storage, efficient rack-system parking, extensive natural light, and ample power capacity.
The overall Palo Alto market, with occupancy rates above 96%, boasts the highest average Class A asking rental rate in the Silicon Valley market, with levels approaching $8 per square foot NNN per month, per CBRE. Some recent leases have exceeded $10 NNN indicating the strength of demand relative to the extremely constrained supply. In this environment both the ownership and lender were comfortable proceeding without a tenant commitment at commencement.
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