Embarcadero Capital Partners has defaulted on a $63.5 million loan tied to a 181,200-square-foot office campus in Sunnyvale.
The Redwood City-based investor defaulted on the mortgage loan for Horizon Sunnyvale at 1230-1290 Oakmead Parkway, the San Jose Mercury News reported.
Embarcadero Capital is delinquent on the $63.5 million loan made in 2019 by LoanCore Capital REIT, based in Greenwich, Connecticut.
Embarcadero bought the three-story office complex in 2016 for an undisclosed price. The campus, built in 1978, is near the Lawrence Expressway and Highway 101
The firm then revamped the campus four years later to appeal to tech firms, with “jewel-box lobbies,” an outdoor bike spa, meeting areas and a sculpture garden.
Then the tech sector shed offices in a pandemic shift to remote work, followed by rounds of layoffs.
Office vacancy rates in Silicon Valley were up to 17 percent in June from 11 percent in 2019, according to CoStar. A record 7.6 million square feet of offices were available for sublease.
The region’s total availability rate — the vacant offices combined with available offices for sublease — was 26.6 percent in the third quarter, according to Savills , with an additional 3.1 million square feet on the market compared to a year ago.
Despite the headwinds in commercial real estate, Sunnyvale landlords have signed some major leases from tech companies such as Apple looking to consolidate their offices.
In June, Sunnyvale had the second-largest rentable office inventory in Silicon Valley at 20 million square feet, second only to the 27 million square feet in San Jose.
The Silicon Valley hub had a 9.5 percent vacancy rate and 700,000 square feet of offices available. In terms of price, Sunnyvale has a $6.65 asking rate, third in Silicon Valley.
— Dana Bartholomew