Office towers in Campbell bought at a huge discount

SOUTH BAY REAL ESTATE

Pruneyard complex acquired in all-cash deal for $54M; in 2019 the site listed for $141.5M

Experts say the purchase price for the Pruneyard office towers suggests that property values for office complexes are continuing to tumble.

Pruneyard Tower 1 is an 18-story highrise in Campbell that was recently purchased by PSAI Reality Partners, acting through an affiliate. PHOTOS BY DAI SUGANO — STAFF PHOTOGRAPHER

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By George Avalos

gavalos@bayareanewsgroup.com

CAMPBELL >> The Pruneyard office towers in Campbell have been purchased at a huge discount to their prior value, records show.

PSAI Realty Partners, acting through an affiliate, paid $54 million in an all-cash deal for the three-tower complex that is perched next to State Route 17, according to documents filed on Feb. 28 with the Santa Clara County Recorder’s Office.

The office complex at 1901 South Bascom Ave. totals 365,000 square feet.

PSAI Realty paid a price that was 65% less than the $154.8 million estimated value 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.

The deal suggests that property values are continuing to plummet for office buildings throughout the Bay Area, even high-profile towers in the region such as the Pruneyard office complex.

“This is a value extinction event for a lot of office buildings,” said Mark Ritchie, president of San Jose-based real estate firm Ritchie Commercial. “The building owners and the lenders are not going to come out of this whole.”

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.

Commercial real estate’s slumping values are poised to become a widening challenge for Bay Area governments and agencies that depend on property taxes for revenue.

“Municipalities are really going to feel this,” Ritchie said. “For decades, we designed our cities with revenue-producing city centers and revenue-consuming neighborhoods. The downturn for the office market doesn’t appear to be relenting at this time.”