San Jose's commercial real estate landscape is facing tumultuous times amidst post-pandemic fallout as key properties default on loans and investors scramble to remain afloat. The recent default of an office building at 5729 Fontanoso Way in South San Jose, purchased for $27.4 million by Atlas Capital Investments in May 2022, serves as a stark reminder of the market's vulnerability according to the Mercury News.

Another notable default is a San Jose office building at 152 North 3rd Street, reported by Hoodline, which is connected to ex-WeWork CEO Adam Neumann through his private family office, Nazare Asset Management. A $31 million loan issued by Rialto Capital Management for the property in 2021 has landed in default as well, further complicating the status of San Jose's stagnating office market.

As the pandemic continues to impact the office sector and tenants remain uncertain about their leasing plans, the availability rate for San Jose's downtown area has climbed to 28%. Class A buildings, in particular, are feeling the pressure as their availability rate hovers at an alarming 37%.

For the Fontanoso Way location, the building had been intended for Khloris Biosciences, a biotech firm co-founded by Joseph Wu and Lynne Bui. Despite being prominently featured on the company's website and raising $5 million in a venture funding round in 2018, no visible indicators suggest Khloris Biosciences ever moved into the office space according to Mercury News. Weeds have overrun the building's landscaping, debris litter the pathways, and a padlock graces its front door.