CAMPBELL — The iconic Pruneyard office towers in Campbell have been bought at a huge discount to their prior value, fresh evidence of a weak Bay Area commercial real estate market.
PSAI Realty Partners, acting through an affiliate, paid $54 million for the three-tower complex, according to documents filed on Feb. 28 with the Santa Clara County Recorder’s Office.
The buying group bought the office complex, a South Bay landmark that’s that’s perched next to State Route 17, through an all-cash deal.
The office complex, which is at 1901 South Bascom Avenue in Campbell, totals 365,000 square feet.
The deal suggests that property values continue to plummet for office buildings throughout the Bay Area, even high-profile towers in the region such as the Pruneyard office complex.
PSAI Realty paid a price that is a jaw-dropping 65% less than the $154.8 million estimated value of the office complex that the Santa Clara County Assessor’s Office calculated as of January 2024.
The $54 million that PSAI Realty plunked down is also 62% less than the $141.5 million price for the office complex in 2019. That purchase six years ago made Oaktree Capital Partners a majority investor in the property in an alliance with Ellis Partners, a veteran real estate firm based in San Francisco.
Put another way, the Pruneyard Towers office complex’s value is now about one-third of what it was in recent years.
The nosedive in the property’s value is another indicator of the economic fallout from the coronavirus-linked business shutdowns that the state government mandated in 2020.
The lockdowns might be over, but employees are returning to the office in a halting and uneven fashion.
Pruneyard Tower One is 18 stories and totals 119,000 square feet; the single-story Tower Two is 119,000 square feet; and Pruneyard Place is six stories high with 127,000 square feet.
At one point, Campbell city officials had approved a fourth tower on the site, a five-story structure that would have totaled 100,000 square feet.
The Bay Area’s brutal office market conditions have erased the viability of a large new office building.
Sky-high vacancy levels and slumping rents now haunt the Bay Area office sector.
The rocky market conditions have also eroded the values of office buildings throughout the region, unleashing an outbreak of foreclosures due to delinquent loans.
PSAI Realty Partners was founded in 1992 as Peter Sullivan Associates. The company is an active investor in properties throughout the Bay Area.