San Jose office and retail building hits sales block after foreclosure

SAN JOSE, Calif. — A San Jose building seized by foreclosure has been listed for sale, a potential transaction that could reveal information about the strength — or weakness — of the local office market.

The development, located south of downtown at 2726 and 2752 Goble Lane, was never finished and eventually fell victim to loan default and foreclosure, raising concerns about the property’s future.

Now, commercial real estate firm Meacham Oppenheimer is attempting to sell the office and retail complex on behalf of its current owner, the property’s lender.

“We’re now showing the property on a regular basis,” said David Taxin, a principal executive and partner at Meacham Oppenheimer. “We’ve had a lot of interest from buyers.”

The two-building complex is approximately 15,500 square feet in size and is located next to a busy stretch of Monterey Highway between Umbarger Road and Lewis Road.

According to documents filed with the Santa Clara County Recorder’s Office, the developer and previous owner of the complex received $6 million in financing from lender Secured Income Fund II in 2019.

According to the property records, the developer was a group led by San Jose-based real estate executive Adeel Mahmood.

In May 2021, the lender filed a notice of default, which stated that the developer had fallen behind on the $6 million in financing provided by Secured Income, a San Jose-based lender.

According to county records, Secured Income obtained ownership of the property through a foreclosure proceeding that was completed in January 2022.

According to the property documents, the lender paid $1 million to take control of the retail building, despite the fact that the unpaid debt, including finance charges, late fees, and penalties, totaled $7.2 million at the time of the foreclosure.

Mahmood attempted to sell the office and retail building at one point. The exterior was recently completed, but the interior was never finished.

Mahmood, according to Taxin, was asking too much for the building for the market.

The coronavirus’s economic woes complicated sales efforts for the property because office and retail buildings are now generally perceived as less valuable than before the virus’s outbreak. “The prior owner was probably attempting to sell it for $500 to $600 per square foot,” Taxin said. “We want to sell it for about $350 to $375 per square foot.”

This could result in a 25% to 42% decrease in the value of the property.

According to Taxin, the lender has striped the adjacent parking lot, repaired broken windows, and erected a fence around the property.

“We would anticipate being able to sell this to an owner-user,” Taxin said.

He estimated that the complex’s two buildings total 7,750 square feet each.

“Restaurants, daycare, medical office, retail — we have a variety of uses for these buildings,” Taxin explained.