CRE Bridge in San Jose

Office is where the distress and the bridge activity concentrate. The Santa Clara County Assessor's own 2026-27 roll shows Prop 8 decline-in-value filings nearly tripling to 24,727 properties, with commercial reductions up 36% in count and cutting over $5.6 billion off the roll. Ninety-eight percent of the $153.6 billion of assessed value under appeal is commercial property. The Assessor's stated reason: rising vacancy, no big leasing deals, and "foreclosures from delinquent loans are becoming more frequent." That distress is not spread evenly. Downtown San Jose office runs 30.4% vacant and Campbell 34.8%, the two weakest submarkets in the county, while Cupertino sits at 3.2% and South San Jose at 6.6%. A bridge in a distressed submarket is a repositioning or conversion play; a bridge in a tight submarket is closer to a lease-up or stabilization hold. Know which submarket you're underwriting before you size the loan.

Yes, and the city has written an incentive into its own tax code for it. San Jose's construction tax ordinance gives a 100% reduction in the Building and Structure Construction Tax to the first 500 rental units in a qualified commercial-to-residential conversion, restricted to pre-2021 buildings in the Downtown Planned Growth Area and excluding Class A office, as long as the sponsor pulls a building permit by December 31, 2027 and passes first inspection within 12 months. Pair that deadline with a downtown office vacancy of 30.4% at an asking rent of $4.30 per square foot per month and the trade is straightforward: bridge the acquisition or the basis, convert before the clock runs out, then refinance into permanent debt once the units are leased. A sponsor who knows the December 2027 deadline has a real edge over one who doesn't.

Measure E taxes the whole sale price at the bracket rate, not just the amount above the threshold, so a sale that crosses a bracket line costs real money on one extra dollar of price. Since July 1, 2025 the exemption threshold is $2,300,000; above it the rate runs 0.75% from $2.3 million to $5 million, 1.0% from $5 million to $10 million, and 1.5% above $10 million, applied to the entire consideration. A $5,000,000 sale owes $37,500. A $5,000,001 sale owes $50,000 the moment it crosses the bracket. On a bridge that is sized around a projected exit sale, price the deal a dollar under the next bracket line rather than a dollar over it, and build the tax into your exit proceeds either way.

Not when it's a court-ordered foreclosure transfer or a deed in lieu of foreclosure; both are named exemptions in the city's own ordinance. San Jose's municipal code exempts any transfer made solely to secure a debt, any transfer made under a court order in a note, deed of trust or lien foreclosure proceeding, and any transfer to a beneficiary or mortgagee taken in lieu of foreclosure, from both Measure E and the base city conveyance tax. That matters directly to a lender-side workout on a distressed San Jose asset. It does not extend to every exit path: whether a nonjudicial trustee's sale carries the same exemption is not confirmed by the ordinance text, so do not assume it applies without checking with the city finance office first.

No, it's moving the other direction. Silicon Valley R&D vacancy was 13.3% in Q2 2026, up from 13.0% the prior quarter and 12.7% a year earlier, with year-to-date net absorption negative 1.48 million square feet across the region. Office, by contrast, has actually improved off a high base, with overall vacancy down to 18.2% from 20.0% a year earlier. Underwrite an R&D or lab bridge to a market that is drifting softer, not one that has already bottomed, and treat any assumption of near-term lease-up as the riskiest line in the file.

At least 25% of value. We lend up to 75% LTV, so on a $6,000,000 San Jose asset that is up to $4,500,000 from us and $1,500,000 from you (6,000,000 x 75% = 4,500,000), interest-only, on a term of up to 24 to 36 months. The live question in this market is what the value actually is: downtown San Jose office runs 30.4% vacant, so a valuation against today's rent roll can size the loan very differently than last cycle's basis would. Subject to underwriting.

Up to $10,000,000. That covers most of the repositioning and conversion deals we see in San Jose, including the downtown office-to-residential trade. It is also a useful line to price against on the exit, because a San Jose sale above $10 million sits in Measure E's top bracket at 1.5% of the full price. A deal sized at the top of our range is usually a deal exiting into the most expensive transfer tax bracket the city has, so build both numbers into the file. Subject to underwriting.

Usually yes. There is no minimum credit score on this program. A commercial bridge is underwritten on the asset and the exit, not on a personal score, and while we do run credit it carries far less weight than it would at a bank. Damaged credit is typically offset with lower leverage rather than a decline. That matters in San Jose specifically, where the county assessor has pointed to foreclosures from delinquent loans becoming more frequent on commercial property, so a sponsor coming out of a workout is not an unusual file here. Subject to underwriting.