Tech Company Buys Foreclosed San Jose Offices

The widespread commercial distress across the Bay Area is presenting some prime purchase opportunities for investors willing to roll the dice. In south San Jose, one tech company plunked down close to $20 million to become the owner of a nearly 80,000-square-foot building.

Rocket EMS paid $18.8 million for a research and office building at 5729 Fontanoso Way in San Jose, Mercury News reported, citing documents filed Wednesday with the Santa Clara County Recorder’s Office. Santa Monica-based asset management firm Evergreen Advantage was the seller in the transaction.

The tech firm bought the 78,200-square-foot building out of foreclosure. The building fell into default in 2023 and sat vacant for years, eventually undergoing a bankruptcy process and finally ending up being seized by lender Evergreen Advantage. At the time of foreclosure in 2024, the building had a value of $24.5 million, meaning Rocket EMS picked up the building at a 23.5 percent discount.

Prior to the default, the building appeared to be on the road to occupancy. In 2021, Khloris Biosciences leased the building, seemingly in expansion mode after raising $5 million in venture funding in 2018. But the life sciences firm never moved in, according to Mercury News.

Rocket EMS’ plans for the building are not clear. The company has offices at 2950 Patrick Henry Drive in Santa Clara and at another location in Carson City, Nevada.

The Fontanoso Way purchase marks the latest office transaction in San Jose where properties have traded below their previously assessed values. On the other side of town in north San Jose, an affiliate of BGO acquired the seven-building Rio Tech Office Park for $164.3 million, a slight haircut from the $170 million that the seller Washington Holdings paid in 2021.

Elsewhere in north San Jose last month, Paceline Investors bought the 92,900-square-foot office and research building at 2581 Junction Avenue for $12.2 million, representing a 61.9 percent discount from its $32 million sale price in 2018.

— Chris Malone Méndez