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anta Clara County's commercial real estate market is experiencing "stagnation," leading to the smallest rate of increase in assessed values in over a decade. The annual assessment roll reached an all-time high of $725.7 billion, but with a 4.15% growth rate, it marked the slowest annual increase since 2012.

    The County Assessor's Office attributes this stagnation to ongoing challenges in the commercial real estate market, including slumping values, loan delinquencies, and foreclosures affecting hotels, office buildings, apartment complexes, and vacant land throughout the Bay Area. This trend is concerning for public revenues, which are tied to property assessments.

    Russell Hancock, president of Joint Venture Silicon Valley, warns that a long-term decline in property values could lead to painful trade-offs and reduced public services. The number of office buildings selling for less than their assessed value has increased, and foreclosures from delinquent loans are becoming more frequent.

    As a result, commercial owners are appealing the valuations of their properties, with an estimated 98% of the $145 billion under appeal being commercial property. This could lead to assessment roll corrections reducing the value of the assessment roll. Developers have also slowed or scrapped projects that were expected to redevelop existing sites and produce higher values.

    The long-term outlook for Silicon Valley remains positive due to its global attraction, with 80% of all tech research and development occurring in the region. However, external factors such as lingering economic aftereffects of COVID-19 and uncertainties over federal government policies are driving this stagnation.