SANTA CLARA — A big South Bay office building has defaulted on a property loan that tops $70 million, an ominous new reminder that economic woes still haunt the Bay Area real estate market.

The building whose loan is in default is at 2390 Mission College Boulevard in Santa Clara, according to documents filed on Jan. 17 with the Santa Clara County Recorder’s Office.

A Santa Clara office building at 2390 Mission College Boulevard, as seen on Jan. 23, 2025. (George Avalos/Bay Area News Group)

PCCP, a Southern California real estate firm, is one of the principal companies that controls an affiliate that owns the office building, according to county and state public records.

Luxembourg-based AB Commercial Real Estate Debt provided a $72 million loan to the PCCP-led affiliate in 2022, county documents show. This is the loan that has become delinquent.

This news organization reached out to Los Angeles-based PCCP to request a comment regarding the situation.

The office building totals 152,300 square feet and is located in one of Silicon Valley’s tech hubs. The building is also located next to San Tomas Aquino Creek, which offers open space, walking, jogging and biking trails.

As of Jan. 26, about 83,600 square feet of space was available for lease, according to a post on the Commercial Search site. That would indicate the building was about 55% vacant.

The building’s loan delinquency has surfaced at a time when the South Bay office market has shown signs of reviving — although vacancy levels remain at brutally high levels.

The South Bay office availability rate was 25.9% during the fourth quarter of 2024, a big improvement from the rate of 27.5% over the final three months of 2023, reported Savills, a commercial real estate firm. The availability rate is the combination of empty office space plus space that tenants are offering for sublease.

A leasing boom during the final months of 2024 helped to spur a big improvement in the office vacancy rate in the South Bay.

The 2024 calendar year produced a slew of huge office rental deals, including leases and subleases. The transactions included:

— Snowflake, 773,000 square feet in Menlo Park.

— Amazon, 217,800 square feet in Mountain View.

— Astera Labs, 154,200 square feet in north San Jose.

— Robinhood, 128,700 square feet in Menlo Park.

— Nvidia, 101,600 square feet in north San Jose.

Still, the default for the Santa Clara office building is a reminder that pockets of weakness still haunt the Bay Area office market despite signs of improvement in regions such as the South Bay.

The default notice means that the lender may seek to foreclose on the loan or auction off the building to interested parties.

The future transactions involving the building will help to determine how much it’s worth.

A growing number of commercial properties, including office buildings, hotels and apartment complexes, have been bought or foreclosed at prices that indicate their values have slumped, sometimes by huge amounts.

Property value trends can have an impact on revenue for an array of public agencies.

If real estate values turn soft in a jurisdiction, that could crimp a crucial revenue stream for city, county and regional agencies, as well as school districts.