A few thoughts on Tesla’s relocation to Palo Alto

| August 26, 2009 | 1 Comment

Its been a long time, but the Page Mill Road corridor in Palo Alto used to be referred to as the Stanford Industrial Park.

Tesla’s 350,000 sf deal in the Stanford Research Park had been floating around the broker rumor mill for a bit, but it was certainly a surprise to see an industrial user eschew more conventional choices like San Jose and Fremont for Palo Alto.  I was away on vacation when the press release came out, and have had some time to think on this.  There are a lot of reasons why this makes a ton of sense:

 Utilities.  Back when manufacturing was a more significant component of the Peninsula’s economy, Palo Alto’s low-cost utilities were a big selling point.  I frankly can’t remember the last time I heard of a user coming to PA where this was a part of the decision process.  For Tesla, I’d bet it was.

 Building cost.  Thats right, a building in PA may have been the most competetively priced option.  Word on the street has Stanford doing an exceptionally aggressive per-foot deal, which makes a lot of sense- faced with a choice of scraping the existing Deer Creek building to accomodate most typical Research Park users, or doing a bargain-basement deal on the existing structure, I can certainly see the appeal of going with the latter.

 Motivation.  My colleague, Rick Knauf, and I were chatting about this the other day.   He speculated– and I think he’s right — that Stanford may well have gone the extra mile to secure a tenant like Tesla because of what they represent and add to the Park– cutting edge technology and Stanford Research Park have gone hand-in-hand for a long time, and I cant think of many companies that are creating more buzz than Tesla these days. 

So (and I can only manage to say this because college football season is still a week away) congratulations, Stanford, on a transaction that I think will benefit both parties.

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