From Bloomberg via Mashable:
Aydin Senkut started his venture capital firm Felicis Ventures in San Francisco a decade ago. Five funds and more than $430 million later, Senkut is ready to open an office on Sand Hill Road, alongside such Silicon Valley institutions as Kleiner Perkins Caufield & Byers and Sequoia Capital. But he’s going to have to pay up.
Located in Facebook Inc.’s hometown of Menlo Park, California, Sand Hill Road has the most expensive office space in the U.S., even as the startup market moderates, according to data from commercial real estate firm Cushman & Wakefield. At an average of $129.91 per square foot annually, it’s up about $6 from last year and exceeds the cost of renting high-end offices in Greenwich, Connecticut, and on New York’s Park Avenue. It is also far more than the $75.39 for comparable space in San Francisco’s south Financial District, which saw a price increase over the last year similar to its neighbor in the Valley, said Robert Sammons, a regional director at Cushman & Wakefield.
While many VC firms are opening offices in San Francisco, Senkut’s move underscores that tech investors are willing to pay a premium for close proximity to other big firms, the companies that might buy or do business with their startups, and the suburban homes of investing partners. What Sand Hill Road lacks is vibrant street life, restaurants, shops or access to major public transportation routes. On either side of the roughly two-mile strip between Interstate 280 and Junipero Serra Boulevard, where many of the world’s top VCs hang their shingles, sit low-slung “woody walk-ups,” nestled among trees, rosemary plants and parking lots.
Felicis Ventures, a backer of clothing startup Bonobos Inc. and satellite maker Planet Labs Inc., is in the process of relocating from its office in downtown Palo Alto, California, the second-most-expensive market in the U.S., according to Cushman & Wakefield. The high prices stem, in part, from the growth of Palantir Technologies Inc., a venture-backed company that has become a major tenant in the area, along with the increasing number of venture firms and startups there, including Wealthfront Inc. and Houzz Inc. The San Francisco Business Times reported this month that Cloudera, a data analytics startup,leased 225,000 square feet in the area.
Rent on Sand Hill Road is generally costlier, but it can be easier to find larger spaces. Felicis Ventures recently signed the lease on a 10,000-square-foot office at 2460 Sand Hill Road, where Senkut plans to host big events for his startups and investment prospects. He declined to discuss how much he’s paying for the space. “Let’s be honest: It’s still a high rent,” he said....MORE