Palo Alto Class B Office Trades Top $500 Per SQFT Even as Submarket Vacancy Barely Moves
Why this matters
Office continues to trade in two distinct markets: trophy assets in walkable submarkets that are leasing at or near record rents, and commodity Class B and C buildings where the basis is still resetting. Underwriting on the latter has moved toward replacement-cost-minus, with credit underwriting now leaning on tenant covenant and remaining lease term rather than mark-to-market expectations. For LP-positioned capital, the read-through is that the bifurcation is now a structural feature of the sector, not a cycle to wait out.
Editorial analysis · Real Estate Trail Editorial
On the RET wire
- Disclosed office deal value tracked in October 2026: $5.8B across 24 reported transactions. All Office coverage →
Computed from Real Estate Trail’s own tracked coverage
Palo Alto's office vacancy improved just 10 basis points over the past year, trailing neighboring submarkets, yet institutional buyers frequently paid more than $500 per square foot for Class B buildings there, accord…
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