SAN JOSE – A big San Jose office constructing has been seized by its lender, despite bankruptcy proceedings being initiated to stave off foreclosure, in an indication of weaker property values and unfavorable market conditions.
The lender for the constructing at 10 West Tasman Drive in north San Jose has secured the property at a price that implies a plunge in the worth of the office property, based on documents filed Oct. 4 with the Santa Clara County Recorder's Office.
The office constructing was purchased for $23.7 million, county real estate records show. This price was the worth the lender placed on the constructing when it took possession of the office center.
In stark contrast, the constructing's January 2024 value was $51.3 million, based on the Santa Clara County Assessor's Office's most up-to-date assessment.
This signifies that the quantity paid by the lender to take possession of the constructing is an incredible 53.8% lower than the worth calculated by the County Assessor's Office. Copia Lending used a subsidiary, 10 West Tasman Drive, to take possession of the constructing.
The declining value of economic real estate is prone to turn out to be a growing challenge for city, county and regional governments within the Bay Area, in addition to for public school districts that rely partially or largely on property taxes for revenue.
Lower prices for office, retail and hotel buildings could do greater than just slow gains in property tax revenue. The falling values could even result in a decline in property tax revenue.
Both outcomes could weigh on government coffers over the subsequent yr if the decline in value continues.
The next steps for the ten West Tasman constructing in north San Jose could provide a part of the image for industrial real estate values within the Bay Area.
Like so many office buildings within the Bay Area, the ten West Tasman site is struggling financially.
The 105,000-square-foot constructing has been vacant for years, based on U.S. Bankruptcy Court documents. It has a main location on the corner of West Tasman and North First Street, next to or near light rail stations.
San Jose-based Heritage 10 West Tasman LLC had owned the constructing since 2021, when the corporate purchased it for $30 million. Executives involved in owning or managing the constructing included Ji Wan Jung, Sung Hong, Samyang Development, Doo Pyo Lee, Daehyun Kang, Ji Young Kim and David Jankowitz, based on U.S. Bankruptcy Court filings .
The ownership group filed for bankruptcy to avoid foreclosure and lack of the constructing and investment within the property.
The previous ownership group, which lost the constructing to foreclosure, said it could never discover a tenant for the big office property.
Global and native economic disasters merged and destroyed the office constructing's financial foundation.
“The pandemic and the prolonged tighter lockdowns in California, as well as the time it took for companies to pivot from remote work and return to a traditional work environment,” undermined tenants’ interest within the constructing, the previous property owners said in court filings.
Now the lender that owns the constructing faces the daunting challenge of finding a buyer or tenant for the constructing in a difficult office market.
A possible buyer could charge a particularly low price to buy the office complex, depriving the lender of it. Such an consequence could reduce property values even further.
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