SAN JOSE — A big San Jose tech building has toppled into a loan default, a financial setback that underscores the widening economic ailments that confront the Bay Area office market in the wake of the coronavirus outbreak.
The office building at 10 West Tasman Drive is now delinquent on its mortgage, according to documents filed on Dec. 15 with the Santa Clara County Recorder’s Office.
The loan that’s in default totals $29 million and was provided to the building’s ownership group in 2021 by Copia Lending, the county records show.
The building owner is a San Jose-based investment group whose executives include Doo Lee and Joon Kim, according to state business records.
The borrowers appear to have paid off a significant amount of the original $29 million loan before the financing became delinquent. The county documents show the property ownership group owed $20.3 million at the time of the default filing.
The San Jose-based building owners paid $30 million in 2022 for the property, including buying the structure and a ground lease for the land beneath the building, according to public real estate records.
The two-story building, located near the corner of West Tasman Drive and North First Street, totals 105,000 square feet. The office building is empty, this news organization’s direct observation of the property in recent days shows.
In the wake of the coronavirus, the Bay Area office market is undergoing seismic shifts.
Before the virus outbreak in 2020, the office market in the region was humming due to a seemingly insatiable appetite on the part of tech companies to find office spaces and property sites for their expansion. Biotech companies added to the leasing and property purchase frenzy.
The onset of the coronavirus, however, prodded state and local government agencies to impose draconian business shutdowns to help curb the spread of the deadly bug.
The lockdowns chased countless office employees away from their workplaces. Even after the restrictions were eased, the return to the office has been uneven because many people are still choosing to work from home or remotely.
At the same time, tech companies slashed their respective appetites for office space, trimmed their property footprints and embarked on layoffs.
Feeble office rents have eroded office building values and created an environment for loan defaults — and potential foreclosures. Some experts believe the problems in the office market could persist through at least the end of 2024.
The 10 West Tasman office building now might face foreclosure proceedings unless the loan isn’t paid off or the borrower and the lender reach an accommodation regarding the property’s finances.