SUNNYVALE — A big office complex in Sunnyvale has staggered into default on its loan, a financial setback that suggests post-coronavirus maladies still afflict the commercial real estate market in the Bay Area.
Horizon Sunnyvale, a revamped office center on Oakmead Parkway, is in default on its real estate mortgage and could face a loan foreclosure, documents on file with the Santa Clara County Recorder’s Office show.
The office complex consists of four interconnected buildings and totals 181,200 square feet, according to a marketing flyer distributed by property owner Embardero Capital Partners and commercial real estate brokerage Newmark.
The financing that has become delinquent totals $63.5 million and was provided by lender LoanCore Capital REIT in 2019, according to the county’s real estate records.
The financial difficulties serve as a fresh example of the unforeseen and cataclysmic economic woes spawned by the onset of the coronavirus in early 2020.
Embarcadero Capital bought the big three-story office complex in 2016. In 2020, Embarcedro Capital, one of the Bay Area’s top-notch and veteran real estate firms, launched a complete modernization of the buildings.
The revamp of the Sunnyvale office center occurred at a time when coronavirus-linked fears prompted a flurry of companies to rethink how office space should be structured.
The modernized campus features flexible spaces and offices with easy access to outdoor areas to promote wellness and a healthy work environment. The property is geared toward tech companies seeking creative places for people to work.
But severe economic challenges have emerged for the Bay Area office market in the wake of the tech industry chopping jobs in the region and companies cutting back the size of their work footprints.
Plus an uneven return to work even after the end of business shutdowns to combat the spread of the coronavirus has unleashed additional fierce headwinds for the office market in the Bay Area.
Office vacancies have hopped higher, tech companies have moved to terminate or not renew their leases and numerous office spaces are being offered for sublease as companies exit those workplaces.
In some instances, loans have matured and come due, a challenge that has forced office building owners to face the forbidding prospect of replacing an expiring loan with a new mortgage at a sky-high interest rate.
These additional complications have forced a growing number of Bay Area office buildings into loan defaults and foreclosure proceedings.
