Sunnyvale has always acted as an incubator for technology companies.

But as with any nest, some companies find tight space forces them to fly out of town: In early 2004, Marvell Semiconductor moved several exits east on Highway 237 to Santa Clara, and Yahoo! recently signed a short-term lease in Santa Clara to handle its expansion.

To retain the large companies that bring business to the city, Sunnyvale is pushing to develop "Class A" office space. The "Class A" rating, the highest for office space, is based on the quality of construction and the amenities included. While Sunnyvale has quality buildings, many are already in use or getting old.

The first "Class A" effort can be seen as the Jay Paul development company negotiates with Lockheed Martin to purchase slightly more than 50 acres of unused land on the Lockheed property. The Jay Paul plan is to develop 1.6 million square feet of Class A office space.

"It will allow the city to keep large companies like Yahoo!, Network Appliances, Juniper Networks and all the others that are in that area now," Sunnyvale Mayor Ron Swegles said.

This is not the first time Lockheed has sold property to developers.

At one time, its campus exceeded 300 acres, but it has gradually subdivided and sold off pieces of land as its industry changed. Yahoo! and Juniper Networks both bought former Lockheed land and moved there in 1999 and 2001 respectively.

The plan is also important to Sunnyvale because city believes it must stay competitive if it wants to attract new businesses or hold onto established ones.

"Anything that goes into that area and enhances it and brings new businesses in--as the Jay Paul plan aims to--is good for Sunnyvale," John Pilger, Sunnyvale communications officer, said.

A representative from Jay Paul declined to comment on the issue, but Pilger said he believed a final deal between Lockheed and Jay Paul--for approximately $90 million--should be finished shortly. According to Pilger, there are no committed tenants yet for any future space.But Swegles said that Sunnyvale has an advantage because it has companies already in the Moffett Park area that want to stay in Sunnyvale.

The land sale was made possible in October, when the Sunnyvale Planning Commission approved a plan by Lockheed Martin to turn its land into five separate lots. The company, which has been downsizing since the fall of the Soviet Union, according to Jim Carl, senior manager in facility planning and resource management, would consolidate its operations onto the northernmost space and look for buyers for the rest of the land.