SAN JOSE — A San Jose office building linked to one of Northern California’s veteran real estate firms was seized through a foreclosure that points to slumping Bay Area commercial property values.
The lender for the building at 2290 North First St. now owns the property after a trustee’s sale and loan foreclosure held on Monday in downtown San Jose.
The building totals 75,900 square feet, according to the Compstak commercial property website. It wasn’t immediately clear how much space was vacant at the time of the foreclosure.
Through affiliates, the building had been owned by a group tied to Case Swenson, CEO and president of San Jose-based Swenson, a stalwart of Bay Area real estate.
Prime Finance Short Duration Holding Co. took ownership of the office building after it foreclosed on a $12 million loan the lender had provided to the Swenson-linked affiliate in 2021, according to Santa Clara County real estate records.
“Unfortunately, office buildings of this size are more apt to foreclosure,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy. “We will see a trend of these buildings being taken back by their lenders.”
The lender took control of the building at a value of just under $9 million, 55.3% less than the property’s value as estimated in January 2024 by the Santa Clara County Assessor’s Office.
The North First building isn’t the only north San Jose office property to struggle financially. Others include:
— 3100 North First St. was foreclosed and seized by its lender at a value of $19 million in May 2024. It was then bought for $17.5 million by a fast-expanding biotech company in September. In January 2024, the Assessor’s Office placed the then-empty building’s value at $32.1 million.
— 10 West Tasman was taken back by its lender through foreclosure in October 2024 for $23.7 million, far below its assessed value of $51.3 million at the start of 2024. The foreclosure occurred despite the former owner’s efforts to ward off the foreclosure by filing for bankruptcy.
The loan foreclosure on the 2290 North First building mirrors other economic challenges for the Bay Area office market. The foreclosure on the delinquent financing is also a reminder that even a top real estate firm — which is the case with the Swenson organization — might still stumble financially in a rocky office market.
The public relations firm that represents the Swenson firm has not responded to inquiries from this news organization regarding the situation.
The ongoing foreclosures might prompt Bay Area local political leaders to consider whether it might be better to demolish distressed office buildings so they might be converted into housing or other more productive endeavors.
“Cities throughout the Bay Area are going to look at whether it would be better to knock them down or let them sit there for 10-plus years,” Staedler said.
