Lender grabs control of big South Bay office building over failed loan

SANTA CLARA — A lender has seized ownership of a big South Bay office building through a loan foreclosure that provides a fresh reminder that economic maladies still afflict Bay Area commercial properties.

The foreclosed property is an office building at 2390 Mission College Boulevard in Santa Clara. The building totals 152,300 square feet and is located in one of Silicon Valley’s tech hubs.

Tech complex is eyed in San Jose on site of failed housing project

Google seeks to sell some Mountain View sites that may become housing

As Google retreats from real estate, will it still build the 15,000 homes it promised?

Notre Dame de Namur sells Belmont campus to University of California Investments

Housing plans emerge for big chunk of vast San Jose tech project site

AllianceBernstein, a Tennessee-based investment and asset management firm, used an affiliate to take ownership of the building through the foreclosure.

PCCP, a Southern California real estate firm, had acted through an affiliate to obtain a $72 million loan for the property in 2022.

That loan became delinquent in January 2025, documents on file with the Santa Clara County Recorder’s Office show.

The lender paid $21.7 million to take the building back through the foreclosure. That points to a severe decline in the building’s value.

The building’s loan foreclosure has surfaced at a time when the South Bay office market has shown signs of starting to perk up — although vacancy levels remain at high levels.

The South Bay office vacancy rate was 16.4% during the January-through-March first quarter of 2025, according to a report by Colliers, a commercial real estate firm. That was a slight improvement from the region’s vacancy rate of 16.6% in the fourth quarter of 2024.

A leasing boom during the final months of 2024 helped to spur improvement in the office vacancy rate in the South Bay. The transactions included:

— Snowflake, 773,000 square feet in Menlo Park.

— Amazon, 217,800 square feet in Mountain View.

— Astera Labs, 154,200 square feet in north San Jose.

— Robinhood, 128,700 square feet in Menlo Park.

— Nvidia, 101,600 square feet in north San Jose.

Still, the foreclosure involving the Santa Clara office building is a reminder that pockets of weakness still haunt the Bay Area office market despite signs of improvement in regions such as the South Bay.