Lawrence Stone , Santa Clara County Assessor, Always Has Great Insights!
Lawrence Stone , Santa Clara County Assessor, Always Has Great Insights!
My favorite County Assessor in the entire Country has been Lawrence Stone, who is retiring from Santa Clara County Assessor after over three decades in this role and 47 years as a public servant. His Annual Report is superb, loaded with facts and data, and his wisdom will be sorely missed! In his latest 2024 report he shared insight that I believe also speaks to what is going on in many parts of the Unted States. “The 2025 assessment roll may reflect dramatic declines in values for commercial properties that changed hands after the January 1, 2024, Lien Date. For example, a commercial property in downtown San Jose recently sold for 77 percent less than its purchase price five years ago, while a foreclosure in Mountain View lost one-third of its value compared to its price three years ago. Although Class A office space values are declining, other commercial property types are either maintaining or increasing in value, particularly in industrial and warehousing sectors, which are experiencing low vacancy rates due to the growing demand for data centers fueled by advancements in Artificial Intelligence (AI). As the commercial property market continues to evolve, my forecast for assessment roll growth in the coming years remains cautious.”
As a real-life example of this, Class A office buildings in San Francisco which pre-Covid sold for $700-1,000/square foot or more are now routinely going for $250-300/square foot. 505 Montgomery St., San Francisco, a 365,000 sf office building, is rumored to be in play right now for $300/sf. Meanwhile, Prologis is paying $333/sf for a 177,000 square foot industrial building in Fremont. Office turnover can cost landlords $50-125/sf for tenant improvements, while many warehouse and industrial buildings are left broom-clean and released as-is.
