PALO ALTO — A building on a prime site in downtown Palo Alto has been purchased by a busy developer, a deal that could provide clues to the strength — or weakness — of downtown markets’ commercial strips of Silicon Valley.
Currently, Restoration Hardware occupies the property, a University Avenue retail operation that has been part of downtown Palo Alto for several years.
Peter Pau, a veteran developer who runs real estate company Sand Hill Property Co., paid $10 million for the building, located at 281 University Ave. near the corner of Bryant Street, according to documents filed July 8 with Santa Clara County. Recorder’s desk.
The twist of the deal: Pau bought the building knowing full well that Restoration Hardware would be moving out of downtown Palo Alto by the end of this year and moving into a flagship department store in the famed Stanford Mall.
“Peter is very optimistic about downtown Palo Alto and the relocation of the building,” said David Taxin, partner at Meacham/Oppenheimer, a commercial real estate firm. Taxin arranged the purchase of the property on behalf of Paul and Sand Hill Property.
The purchase of the property came at a time when downtown Palo Alto is trying to heal — as is virtually every downtown neighborhood in the Bay Area and California — economic hardship triggered by the coronavirus-related business closures that state and local government agencies have orchestrated to combat the deadly bug.
“Restoration Hardware spent between $3 million and $5 million to renovate the building,” Taxin said.
The sellers, a group led by a local family trust, attempted to sell the building for $14 million.
“We think we got a pretty good deal on the $10 million building,” Taxin said.
The next major challenge is finding a tenant for the building, as Restoration Hardware plans to open its brand new flagship at the Stanford Mall before the end of this year.
“Downtown Palo Alto has had its issues, like every other downtown, after the coronavirus and retail tried to return to a new normal,” Taxin said.
The building totals 15,000 square feet, consisting of 7,500 square feet of retail on the ground floor and 7,500 square feet of a basement, according to Taxin.
The outcome of Sand Hill Property’s attempts to find a new tenant for the building could provide clues to downtown Palo Alto’s recovery from its coronavirus-related illnesses.
“Pau thinks he can find a tenant and the retail market in Silicon Valley is going to be strong,” Taxin said.