{"id":3979,"date":"2026-07-07T16:39:40","date_gmt":"2026-07-07T16:39:40","guid":{"rendered":"https:\/\/nextcitydigest.com\/?p=3979"},"modified":"2026-07-07T16:39:40","modified_gmt":"2026-07-07T16:39:40","slug":"commercial-real-estate-woes-weigh-on-santa-clara-county-property-values","status":"publish","type":"post","link":"https:\/\/nextcitydigest.com\/?p=3979","title":{"rendered":"Commercial real estate woes weigh on Santa Clara County property values"},"content":{"rendered":"

SAN JOSE \u2014 Despite a record high in total value, a weak commercial real estate market has weighed down properties in Santa Clara County, according to a new report that raises questions about tax revenue trends for an array of public agencies.<\/p>

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The annual assessment roll in Santa Clara County was about $760.1 billion as of January, the Assessor\u2019s Office reported, up 4.7% from the $725.7 billion reported for January 2025.<\/p>\n

\u201cThe volatile and unpredictable nature of Santa Clara County real estate causes uncertainty for the future of property values,\u201d County Assessor Neysa Fligor said.<\/p>\n

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The rate of increase was the third-smallest annual gain since 2012. Only 2021, at a 4.6% rise, and 2025, with a 4.1% gain, produced lower yearly gains.<\/p>\n

The pace of annual increases could impact public agencies in the South Bay.<\/p>\n

\u201cThe major beneficiaries of property tax revenue are public schools, community colleges, cities, special districts, and Santa Clara County,\u201d the Assessor\u2019s Office reported. \u201cMore than 50% of local property tax revenue generated in Santa Clara County goes to fund public education.\u201d<\/p>\n

Lower values for office buildings, hotels, and retail centers has become a key factor in the faltering pace of assessment valuations.<\/p>

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\u201cChallenges in the commercial real estate market continue to stunt property values as they sometimes transact at less than existing roll value,\u201d the Santa Clara County Assessor\u2019s Office stated in its report. \u201cResidential property transfer of ownership transactions remained steady and accounted for the majority of roll growth.\u201d<\/p>\n

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\"A<\/figure>\nThe 4.7% annual rise in total value was primarily driven by increases in business-related property such as workplace computers, machinery, desks, and other equipment, as well as increases in personal property such as boats or aircraft.<\/p>\n

Downward pressure for property values could persist in the South Bay and throughout California due to provisions in a statewide constitutional amendment that was enacted nearly a half-century ago.<\/p>\n

Some elements of 1978\u2019s Proposition 8 oblige county assessors to shave the assessed values of a parcel during a time when residential or commercial property markets are in decline in an area. That\u2019s the case in much of the Bay Area and South Bay.<\/p>

\n<\/div>\n

\u201cThis year\u2019s roll includes 24,727 properties in Prop. 8 decline status, almost triple the 8,699 in the prior roll year,\u201d the Santa Clara County Assessor\u2019s Office reported.<\/p>\n

As of January, Prop. 8-triggered declines were in play for roughly 24,100 residential properties, an increase of 193%, or nearly three times the 8,200 Prop. 8 declines for residential sites as of January 2025, the Assessor\u2019s Office reported.<\/p>\n

Prop. 8-linked declines were reported for an estimated 625 commercial properties as of January, up 46% from the 478 that were in decline the year before.<\/p>\n

Over the past decade, the value of the assessed roll has risen 81.3%, said Bob Staedler, principal executive with land-use consultancy Silicon Valley Synergy.<\/p>\n

\u201cThat kind of sustained growth underscores the long-term strength and resilience of the region\u2019s economy, even as the pace has moderated to a more sustainable level,\u201d Staedler said. \u201cIt also challenges the increasingly tired narrative that Silicon Valley is in permanent decline.\u201d<\/p>

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Still, some trends point to weaker property value growth over a longer term.<\/p>\n

During the most recent five years covering 2022 to 2026, the value of Santa Clara County\u2019s assessed roll is up 5.7%. From 2017 to 2021, the value rose 6.6%. From 2012 to 2016, it jumped 7% in a post-recession rebound.<\/p>\n

Russell Hancock, president of San Jose-based think tank Joint Venture Silicon Valley, said ongoing growth to record levels is a hopeful sign. Still, some unpleasant times may loom for the entities that depend on property tax revenue.<\/p>\n

\u201cFor local government and public agencies, this signals belt tightening and reduced services,\u201d Hancock said. \u201cNow, our public officials will have to make painful trade-offs.\u201d<\/p>\n

Slumping property values could present at least some silver linings for the South Bay economy.<\/p>\n

\u201cOwners will be able to offer lower rents to tenants that want less expensive space,\u201d said David Sandlin, an executive vice president with commercial real estate firm Colliers. \u201cYou might also see more companies expanding through purchases of office spaces.\u201d<\/p>\n

Apple and Fortinet are among the tech companies that have been busy buying commercial real estate as they seek more elbow room in Santa Clara County. Both companies have landed some commercial sites at discount prices.<\/p>\n

On a city-level basis, Sunnyvale enjoyed the largest one-year bump with a 7.2% increase in overall assessed property values.<\/p>\n

\u201cGoogle\u2019s office campus in Sunnyvale added significant assessed value, as did the Applied Materials technology demonstration campus and Intuitive Surgical headquarters,\u201d the Assessor\u2019s Office reported.<\/p>\n

After Sunnyvale, the next highest-ranked cities in terms of growth include Los Altos at 6.4% and Los Altos Hills, Monte Sereno and Saratoga all at 5.7%.<\/p>\n

San Jose saw a 4.5% increase in the value of its assessed roll.<\/p>\n

The slowest assessment growth occurred in Mountain View with an increase of 2.9%, slightly lower than the next-weakest gain in assessed value of about 3% in Gilroy. Other cities in the bottom five for growth were Milpitas with 3.5%, and Cupertino and Santa Clara, both at 3.7%.<\/p>\n

A downturn in office and hotel markets has triggered a growing number of failed loans and foreclosures, county officials warned.<\/p>\n

An estimated 98% of the $153.6 billion of assessed value under appeal is commercial property, according to the Assessor\u2019s Office.<\/p>\n

\u201cWe expect to receive a greater number of commercial property assessment appeals filed this year, which may result in assessment roll corrections changing the value of the assessment roll,\u201d Fligor said.<\/p>

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A feeble commercial real estate market has weighed down assessed property values in Santa Clara County, raising questions about tax revenue trends for an array of public agencies.<\/p>\n","protected":false},"author":1,"featured_media":3977,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-3979","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"\nCommercial real estate woes weigh on Santa Clara County property values - Next City Digest<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nextcitydigest.com\/?p=3979\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commercial real estate woes weigh on Santa Clara County property values - 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