Sunnyvale Town Center Officially For Sale As Litigation Cloud Lifts

For more than four years, a high-profile legal fight over the ownership of Sunnyvale Town Center has kept the project in a state of half-built limbo. But that could soon change, as the apparent end of litigation clears the way for owner Wells Fargo to sell the massive mixed-use center to a developer who would finish the job.

On Wednesday, the California Supreme Court denied a request from Sand Hill Property Co. to revisit a California Court of Appeal decision issued in May. The Court of Appeal had rejected Sand Hill’s claims against Wells Fargo related to a 2011 lawsuit, which alleged a foreclosure auction of the center was not properly held.

Observers said that the Supreme Court’s denial is likely to end Sand Hill’s case against Wells Fargo, which has been one of the region’s longest-running real estate story lines and long a source of consternation for city officials.

The lifting of the legal cloud clears the way for a sale of the property to a developer who would complete the project. A Wells Fargo spokeswoman on Wednesday confirmed that Eastdil Secured, a subsidiary of Wells, had been retained to market the Town Center.

“We’re pleased with the court’s decision, which is a big step in paving the way for a potential sale,” Wells spokeswoman Elise Wilkinson said in an emailed statement. “We will consider offers from qualified buyers who will work with the City of Sunnyvale towards completing its vision for downtown.”

“Our goal is to see this project come to fruition,” said Santana, in a statement, “so we have taken strategic actions and will continue to position Sunnyvale to realize the full potential of our downtown.”

What a buyer would get

A buyer would be acquiring a project approved for nearly 1.7 million square feet of total development, about 1.1 million of which is either completed or partially completed. While finishing it would require some work, it is a rare, ready-to-build large project — a block from Caltrain — in a region where finding sizable development sites is tough and getting approvals takes years.

Because of that, the offering is likely to attract significant interest from deep-pocketed investors, though the diversity of product type could also limit the buyer pool. Still, I’m hearing Wells would allow investors to acquire parts of the project as well as the whole thing.

The run-down includes:

• Two completed office buildings totaling 314,000 square feet and fully leased to Apple Inc. and Nokia through 2020
• 198 partially completed, for-sale residential condos in three buildings
• 245,000 square feet of retail that is partially complete
• a 105,000-square-foot theater building (with strong interest from both a national theater operator and a grocer)
• Two new parking structures already in use with about 2,765 stalls; a 967-stall parking structure that requires renovation; and surface parking lots totaling about 743 spaces
• Additional land approved for about 435,000 square feet of hotel, office, retail and residential
• Target and Macy’s are not part of the offering, but function as what’s called “shadow anchors” because they drives traffic to the rest of the project even though they are owned separately.