Question 1

Which Santa Clara County commercial submarkets actually stabilize for permanent debt right now?

Accepted Answer

The low-vacancy submarkets, not the visible ones downtown. Cupertino office vacancy sits at 3.2%, South San Jose at 6.6%, West San Jose at 9.2%, and Sunnyvale at 13.7% as of Q2 2026, while Downtown San Jose runs 30.4% and Campbell 34.8%, the two highest vacancy submarkets in the Cushman and Wakefield Silicon Valley table. A signed rent roll in one of the tighter submarkets is a much easier file to place through agency, insurance or wholesale permanent channels than the same square footage downtown. Subject to underwriting.

Question 2

Downtown San Jose office is over 30 percent vacant. Does that rule out permanent financing there?

Accepted Answer

It rules out an unstabilized building, not the submarket. Downtown San Jose office vacancy stood at 30.4% in Q2 2026, and Campbell ran even higher at 34.8%, both well above the Silicon Valley office average of 18.2%. Permanent debt needs an executed rent roll, so a downtown or Campbell asset without one is a bridge loan story first, refinanced into permanent debt once it leases up. Subject to underwriting.

Question 3

What is the Santa Clara County Assessor seeing that a commercial buyer should underwrite to?

Accepted Answer

Rising distress in the office stock, in the Assessor's own words. Properties in Prop 8 decline-in-value status on the 2026-27 roll nearly tripled to 24,727, commercial reductions cut the assessed roll by more than $5.6 billion, and 98% of the $153.6 billion under appeal is commercial property. The Assessor's release states plainly that office buildings are "selling for less than assessed value, and foreclosures from delinquent loans are becoming more frequent." That is the environment a permanent lender is pricing into a Santa Clara County office file right now, whatever the specific submarket. Talk to your CPA about how a reassessment affects your own file.

Question 4

How does San Jose's property tax structure affect a stabilized commercial hold?

Accepted Answer

The tax rate area, not a countywide average, sets the bill, and it resets on purchase. San Jose alone has 204 tax rate areas ranging from about 1.14% to 1.31% of assessed value, and a change of ownership reassesses the parcel to the purchase price plus a supplemental bill. On a long-term permanent hold, that tax rate area is a fixed carrying cost for the life of the loan, so pull the specific TRA before sizing debt service, not the county median. Talk to your CPA about your own parcel.

Question 5

Does San Jose's Measure E transfer tax apply when I acquire a stabilized commercial property here?

Accepted Answer

Yes, on the full price, above a $2,300,000 threshold. San Jose is one of only three cities in Santa Clara County that charge a city transfer tax, and Measure E adds 0.75% to 1.5% of the entire purchase price once it crosses $2.3 million, on top of the city's base conveyance tax and the county's rate. The ordinance exempts transfers by court order in a foreclosure proceeding and deeds in lieu of foreclosure; whether a standard trustee's sale is exempt is not confirmed. Budget the tax into your acquisition costs before permanent debt is placed, and talk to your closing attorney about your specific transaction.

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