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San Francisco-based Brobeck, Phleger & Harrison is relocating its Silicon Valley office into palatial new digs in East Palo Alto, Calif., on Monday — a move that’s costing the firm a pretty penny. The firm is trying to find tenants to sublease about a third of its new 190,000-square-foot space and is also looking to rent out the 120,000 square feet it’s leaving on Geng Road in Palo Alto, Calif. The lease on the old location doesn’t expire until October 2003. Though the firm wouldn’t say how much it’s paying for the leases, lawyers familiar with the space and area real estate agents estimate that Brobeck is facing a lease load of $7 million over the next 18 months for just its old space. Despite the potential financial burden, the firm is touting the new space in a complex dubbed University Circle as a state-of-the-art complex that will give its lawyers access to improved technology and more comfortable work space. Brobeck announced two years ago that it had signed a deal for the new facility that could hold two to three times the number of 115 attorneys then based in Silicon Valley. The Geng Road office now has 129 lawyers and 118 staff. Brobeck initially planned to have 143,000 square feet of office space in the new complex. Given the downturn in the economy and the fact it has shed associates this year, it has cut back the amount of space it will occupy to 120,000 square feet. It plans to sublease 70,000 square feet but has not yet secured a tenant. Subleasing the Geng Road space could be tough. The location doesn’t top many wish lists among law firms in the Palo Alto-Menlo Park area, said Jack Troedson, the executive vice president of Cornish & Carey Commercial, the San Francisco Bay Area’s largest commercial real estate firm. The going rate for office space in that neighborhood is $40 per square foot per year, which is comparable to the going rates about the time Brobeck inked its lease, Troedson said. “It’s not like they’re paying ’99 rates,” he said. Troedson said the going rate for the University Circle space is about $48 per square foot per year and while demand for space in the complex is soft, the premium location of the building has made it a stop for everyone who’s looking. The 12-year lease gives Brobeck lease options for an additional 47,000 square feet in a second building. The offices in the new building are standardized, so there will be no difference between partner and associate offices. The six-story building is part of a complex consisting of three buildings and a Four Seasons Hotel under construction. San Francisco’s McCutchen, Doyle, Brown & Enersen took three floors in one of the buildings in November. The $260 million complex is located at University Avenue and Highway 101. The space is in East Palo Alto, but Brobeck’s letterhead and business cards cite the address as Palo Alto. Brobeck referred questions on the address issue to the property’s developer. McCutchen says its office in the same complex is in East Palo Alto. The city of East Palo Alto deemed the area, previously known as Whiskey Gulch, blighted and placed it in its redevelopment area — which allows taxpayer-funded incentives for new development. Some 51 businesses and 100 families were relocated to make way for the project. Ricardo Noguera, East Palo Alto’s deputy city manager for economic development, said he’s disappointed to hear that tenants are distancing themselves from the city. “That is not positive news,” Noguera said. “It’s an image thing with them.” Aside from redevelopment benefits, the city offered no perks to the developer, who paid the relocation costs and even is funding a shuttle service to and from the Caltrain station to reduce traffic, said Noguera. With the new facility, Brobeck is consolidating from three buildings on Geng Road into one building. Lane said the new space is “really beautiful” with state-of-the-art technology. “We have an incredible, two-story multimedia display that plays in the lobby,” she said. “It makes such a statement when you walk into the lobby.” The two-story, 25-foot wide screen will continuously feature the latest stock quotes, live feed from CNN financial reports, news wires, Brobeck TV commercials and graphic designs. Brobeck has a similar display in its San Diego office. Associates were upbeat about the move and the advantages of working in a new building. “The new office has the latest and greatest. It’s very chichi,” one associate said. But, he added, “it’s kind of sentimental” to be leaving the old space, which Brobeck has occupied since 1983. The firm had smaller digs when it opened the Silicon Valley outpost in 1980.

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