Two East Bay office buildings have collapsed in separate defaults and are at risk of foreclosure and foreclosure due to the delinquencies, further evidence of the weakness of the commercial real estate sector.
One of the office buildings is in downtown Berkeley and the other is in downtown Oakland. Both properties are near BART train stops in the urban centers of those respective cities.
Here are the details of the two real estate loan defaults:
— A downtown Berkeley mixed-use office and retail building known as Constitution Square, located at 2168 Shattuck Avenue, is in default on an $11.8 million loan it obtained in 2018. A subsidiary led by Harvest Properties, a veteran Bay Area developer, and Independencia Asset. Management owns the building whose loan is in default. JPMorgan Chase Bank is the lender.
— A downtown Oakland office tower at 1700 Broadway has defaulted on a $10 million loan to the building’s owner, a subsidiary controlled by La Jolla-based HP Investors. The tower owner obtained the loan in 2020. The lender is Bank of Sierra.
The two defaults on major buildings suggest that the post-coronavirus economic illnesses that have hit the Bay Area’s commercial real estate markets have not yet run their course.
Some experts say more office and retail properties could be seized by their lenders following defaults.
Sharply rising vacancy rates and falling rents are now affecting many Bay Area office markets as companies reduce their appetite for office space.
This worrying dynamic, in turn, has raised the specter of financial distress and defaults for more properties.
California Daily Newspapers