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San Jose office building linked to veteran real estate firm Swenson has been seized through foreclosure, highlighting the struggles of Bay Area commercial property values. The 75,900-square-foot building at 2290 North First St. was sold to its lender, Prime Finance Short Duration Holding Co., after a trustee's sale and loan foreclosure on Monday.

    The building had been owned by an affiliate tied to Case Swenson, CEO and president of San Jose-based Swenson. The lender foreclosed on a $12 million loan provided in 2021, taking control of the property at a value of just under $9 million - 55.3% less than its estimated value in January 2024.

    This is not an isolated incident; other north San Jose office properties have struggled financially. For example, 3100 North First St. was foreclosed and seized by its lender for $19 million in May 2024, while 10 West Tasman was taken back through foreclosure in October 2024 for $23.7 million.

    Experts say these foreclosures reflect the economic challenges facing the Bay Area office market. "Office buildings of this size are more apt to foreclosure," said Bob Staedler, principal executive with Silicon Valley Synergy. "We will see a trend of these buildings being taken back by their lenders."

    The ongoing foreclosures may prompt local leaders to consider demolishing distressed office buildings and converting them into housing or other 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.