SUNNYVALE — A veteran real estate firm has scooped up a big office site in Sunnyvale in a $60 million-plus deal that shows some properties have escaped the Bay Area commercial property market meltdown.

Sunnyvale Business Center has been bought for $65 million by an affiliate of Tidewater Capital, according to documents filed on Sept. 23 with the Santa Clara County Recorder’s Office.

Entry area of 920, 930 and 950 De Guigne Drive, an office and research campus in Sunnyvale. (Google Maps)

The deal offers a rare counterpoint to the widening woes of the Bay Area office market, which is haunted by feeble rents, plunging property values, vast stretches of empty spaces and a wave of foreclosures.

The $65 million price for the three-building campus was 9.4% above the property’s assessed value of $59.4 million as of January 2024.

In sharp contrast, numerous office buildings are being bought for a discount of 60% to 70%, or even more, compared with their prior values.

The office market is particularly feeble in San Francisco, where a full-fledged collapse in values is in progress as that city attempts to escape what some observers describe as an economic “doom loop.”

As for the Sunnyvale Business Center on De Guigne Drive, St. Paul Fire & Marine Insurance Co. sold the office hub to the Tidewater Capital affiliate. The three buildings total 175,000 square feet.

The just-bought office buildings have addresses of 920, 930 and 950 De Guigne Drive in Sunnyvale. They are located in one of Silicon Valley’s major tech and job hubs.

The arrival of the coronavirus spawned economic afflictions and business lockdowns starting in 2020 that emptied out office buildings.

By early 2023, it became clear the corporate appetite for office space had waned greatly, despite the end of COVID restrictions that cleared the way for a return to the office.

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Even worse, tech layoffs descended on the Bay Area, weakening office demand.

Tidewater’s purchase of the Sunnyvale Business Center on De Guigne shows that some investors still scout for Bay Area office properties despite the worsening condition of the region’s commercial real estate markets.

Illumio, a software company, is a tenant in at least one of the three office buildings that Tidewater Capital has just bought.

The recently completed Sunnyvale deal is far from Tidewater Capital’s only office purchase in this section of Silicon Valley.

In June 2024, a Tidewater Capital affiliate paid $100.8 million for a seven-building campus a few blocks away at the corner of De Guigne Drive and Stewart Drive.

In March 2024, Applied Materials paid $32.7 million for two office and research buildings at the corner of East Arques Avenue and De Guigne Drive. The tech titan has been collecting office buildings in the South Bay as the foundation for its future expansion.