South Bay office building deals attract veteran real estate investor

SAN JOSE — A veteran Bay Area real estate firm has bought two office buildings in the South Bay in a sign that investors still seek commercial real estate properties despite tough times for the wobbly sector.

Dollinger Properties has paid $14.2 million to grab two office buildings, one in north San Jose and one in Sunnyvale, in recent transactions.

In the most recent deal, the family-owned Dollinger real estate firm paid $5 million to buy an office building at 1452 North Fourth Street in San Jose, according to documents filed on April 7 with the Santa Clara County Recorder’s Office. Teamsters Local 853 sold the building to a Dollinger affiliate.

Redwood City-based Dollinger Properties also paid $9.2 million to buy a Sunnyvale office building at 428 Oakmead Parkway, county documents filed on March 14 show. Molecular Medicine Research Institute sold the building to the Dollinger-led affiliate.

The San Jose building totals 12,400 square feet and occupies 1.3 acres. The Sunnyvale building totals 31,100 square feet and occupies a 1.1-acre site.

The two transactions help to underscore the shifting tides of the Bay Area commercial real estate market,

The San Jose building was bought for far more than its assessed value of $435,000 as of January 2024. However, the Teamsters local has been a long-time owner of the building. The deal could lead to a sharply higher reassessment of the property’s value.

The Sunnyvale building was bought for 13.2% less than its prior purchase amount, which was $10.6 million in a transaction in 2019. The new owner could seek a reduction in the property’s assessed value.

The impact of shifting property values extends well beyond a survey of the local real estate economy. Property value trends can impact revenue for an array of public agencies.

If real estate values turn soft in a jurisdiction, that could crimp a crucial revenue stream for city, county and regional agencies, and school districts.