San Jose stands at the epicenter of the global technology economy, serving as the Capital of Silicon Valley and the tenth most populous city in the United States. With a population approaching one million and a metro GDP exceeding $275 billion annually, the city offers commercial real estate investors a uniquely dynamic market shaped by tech sector demand, constrained land supply, and ongoing urban transformation. Whether you are financing a multifamily property near the new BART stations, acquiring industrial space in North San Jose, or investing in mixed-use development along the Santana Row corridor, understanding the local lending landscape is essential.
Clear House Lending provides commercial real estate financing throughout the San Jose metro area, from conventional commercial mortgages and SBA loans to bridge financing and DSCR loans. This guide covers current market conditions, loan programs, interest rates, and submarket insights to help you navigate the San Jose commercial lending environment in 2026.
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What Does the San Jose Commercial Real Estate Market Look Like Right Now?
San Jose's commercial real estate market entered 2026 with a complex but increasingly optimistic profile. The city's deep ties to the technology sector create both outsized opportunities and sector-specific volatility, and different property types are telling distinctly different stories heading into the new year.
The office market remains the most closely watched sector. Downtown San Jose carries an office vacancy rate of approximately 30.6%, one of the highest among major Bay Area cities. However, the broader Silicon Valley market has shown meaningful improvement, with total vacancy declining to 16.6% as of mid-2025, representing a 100 basis point drop quarter-over-quarter. Demand is increasingly concentrated in modern, amenity-rich buildings, with AI and enterprise software companies driving leasing activity. Databricks' 305,000 square foot expansion in nearby Sunnyvale exemplifies the flight-to-quality trend reshaping leasing patterns across the region. Office cap rates on Class A properties have risen to 8.4%, while Class B properties sit at 8.68% and Class C buildings have reached 9.02%, according to CBRE data.
The multifamily sector continues to demonstrate resilience. San Jose's apartment vacancy has tightened to approximately 4.8%, well below the national average of 8.4%. Roughly 3,000 new units are expected to come online in 2025, representing about 2% of existing stock, but sustained demand from the tech workforce keeps absorption healthy. Cap rates on Class A multifamily held steady at 4.74%. With only 2,427 units under construction (about 1.5% of inventory), new supply remains constrained enough to support pricing power.
The industrial market benefits from San Jose's position within Silicon Valley's logistics and manufacturing ecosystem. Average industrial sale prices have reached $370 to $475 per square foot, far above the $142 national average, reflecting scarcity value of industrial land in a high-barrier market. Average asking rents stand at approximately $26 per square foot. Industrial cap rates in gateway Bay Area markets hover near 6%, having transitioned from sub-5% levels seen during the pandemic-era boom.
Retail performance reflects the broader strength of Silicon Valley's consumer economy. While e-commerce and some population softness have created headwinds, well-located centers (particularly Santana Row and Valley Fair) maintain strong occupancy and rental premiums. Mixed-use redevelopment of underperforming retail sites continues to attract investor interest.
What Types of Commercial Loans Are Available in San Jose?
San Jose borrowers have access to the full spectrum of commercial real estate financing products. The right loan structure depends on your property type, investment timeline, financial profile, and exit strategy. Given the city's high property values, selecting the optimal program can save hundreds of thousands of dollars over the life of a loan.
Conventional Commercial Mortgages are the standard financing tool for stabilized, income-producing properties. These loans typically offer fixed rates for 5, 7, or 10 years with 25 to 30 year amortization schedules. They are well suited for office buildings, retail centers, and multifamily properties with strong occupancy and predictable cash flow. In San Jose, conventional loans are commonly used for properties in established corridors like Santana Row, North First Street, and the Almaden Valley.
SBA Loans provide government-backed financing for owner-occupied commercial properties. The SBA 7(a) program allows borrowers to finance up to $5 million with down payments as low as 10%, while SBA 504 loans can reach $20 million for real estate and equipment purchases. With more than $77 million in SBA loans issued in the San Jose area in recent years and over 2,000 jobs supported, these programs remain a critical tool for local business owners. SBA loans are particularly popular among tech startups purchasing office space in North San Jose, restaurants in the San Pedro Square Market area, and medical practices throughout the metro.
Bridge Loans provide short-term capital for acquisitions, property repositioning, or lease-up scenarios where traditional financing is not yet available. In San Jose's competitive market, bridge financing enables investors to close quickly on time-sensitive deals while stabilizing the asset for permanent refinancing. Bridge loans are especially relevant for investors targeting value-add opportunities in the Downtown office market, where vacancy-driven discounts create repositioning upside for patient capital.
DSCR Loans evaluate the property's rental income rather than the borrower's personal income, making them attractive for investors with multiple properties or complex tax situations. DSCR loan programs in San Jose typically require a minimum debt service coverage ratio of 1.25x and down payments of 20% to 25%. Given that many Silicon Valley tech professionals earn income through stock compensation and variable bonuses, DSCR loans offer a streamlined path to investment property financing without documenting non-traditional income. Learn more about DSCR loan requirements to see if this program fits your strategy.
Hard Money Loans serve borrowers who prioritize speed and flexibility. These asset-based loans can close in days rather than weeks, making them useful for auction purchases, distressed acquisitions, or properties that do not qualify for conventional financing. Explore hard money loan options for time-critical San Jose transactions.
Construction Loans fund ground-up development and major renovations. With significant activity in Downtown San Jose (including Westbank's 768-unit dual tower project and Jay Paul Co.'s CityView development), construction financing remains essential to the city's growth story.
What Are Current Commercial Loan Rates in San Jose?
As of early 2026, commercial mortgage rates in California start as low as 5.11% for the most qualified borrowers and well-stabilized assets. San Jose rates generally track state and national benchmarks, though the metro's high property values and strong institutional demand can create competitive rate environments for premium assets.
Conventional commercial mortgages for stabilized properties range from approximately 5.11% to 7.25%, depending on term length, property type, and loan-to-value ratio. Lenders typically offer up to 80% LTV on multifamily properties and 75% on commercial assets.
SBA 7(a) loans carry rates in the 6.50% to 8.00% range, though recent regulatory changes implemented in June 2025 have tightened qualification requirements, including higher minimum credit scores and stricter ownership documentation. SBA 504 loans offer fixed rates starting around 5.50% through the CDC debenture portion, with terms up to 25 years for real estate.
Bridge loans in San Jose typically range from 7.50% to 10.50%, reflecting the short-term nature and transitional risk profile. These are commonly structured as interest-only with 12 to 36 month terms.
DSCR loans for investment properties currently start at 6.60% and can reach 8.75%, with rates heavily influenced by the property's net operating income relative to debt obligations, the borrower's credit score, and the loan-to-value ratio.
Hard money loans command the highest rates, generally falling between 9.00% and 12.50%, offset by their speed and flexibility for unconventional situations.
To estimate your monthly payments and debt service coverage ratio, use our commercial mortgage calculator or DSCR calculator.
Which San Jose Submarkets Offer the Best Commercial Investment Opportunities?
San Jose covers more than 180 square miles and encompasses a wide range of commercial submarkets, each with distinct investment characteristics. Understanding these differences is critical for identifying the right financing structure and investment thesis.
Downtown San Jose is undergoing a dramatic transformation. While the office sector carries a challenging 30.6% vacancy rate, this distress is catalyzing one of the most ambitious urban redevelopment pushes in California. Westbank received approval in late 2025 for a 768-unit dual tower project at 35 South Second Street, with towers rising 27 and 28 stories. Jay Paul Co.'s CityView development proposes replacing the existing City View Plaza with 680 new residences alongside retail, restaurant, and office space. An affordable housing tower at 470 South Market Street in the SoFA district will bring 220 units online in early 2026. For commercial loan borrowers, Downtown represents both a value-add office play (acquiring discounted space for repositioning) and a ground-up multifamily opportunity requiring construction financing.
North San Jose serves as the city's primary technology corridor, stretching along North First Street from the Mineta San Jose International Airport to the Milpitas border. Home to Cisco Systems, Samsung, and numerous mid-size tech firms, the submarket saw a 737-unit housing development approved in October 2025, and the Facchino Family has begun demolition at 1655 Berryessa Road for a mixed-income neighborhood near the BART station. Proximity to transit and freeways (I-880, I-680) makes it attractive for multifamily and flex/industrial investors.
Santana Row and West San Jose represent the city's premier retail and lifestyle corridor. Federal Realty's Santana Row complex continues to expand, with the Lot 12 development proposing 258 new market-rate units at 358 Hatton Street. The adjacent Westfield Valley Fair draws regional shoppers, and the corridor commands some of the highest retail rents in the South Bay. Investors targeting retail, mixed-use, or luxury multifamily will find this submarket compelling, though entry prices reflect its premium positioning.
Alviso and the Baylands sit at San Jose's northern edge, adjacent to industrial and data center infrastructure. While constrained by environmental considerations (flood zones and wetlands), the area offers niche opportunities for logistics investors serving South Bay e-commerce and data storage demand.
Edenvale and South San Jose provide a suburban commercial environment anchored by the IBM and Hitachi campuses, light industrial parks, and neighborhood retail along Monterey Road and Blossom Hill Road. Lower entry costs compared to central and west San Jose make this area attractive for investors seeking stable cash flow.
Japantown and the Alameda represent a historic mixed-use corridor. Small-scale retail, restaurants, and professional offices create opportunities for investors focused on smaller commercial properties. SBA loans are well suited for owner-occupants in this submarket.
What Are the Requirements for a Commercial Loan in San Jose?
Commercial loan requirements in San Jose align with California and national standards, though the region's exceptionally high property values create unique considerations around down payment amounts and borrower capitalization.
Down Payment: Conventional commercial loans typically require 20% to 35% down, with most lenders at 25% for non-multifamily properties. SBA loans offer a lower barrier at 10% to 20% down, making them critical for capital preservation in this high-cost market. DSCR loans generally require 20% to 25% down.
Credit Score: Conventional lenders generally require a minimum of 680. SBA programs may accept 650, though June 2025 regulatory changes raised the bar for some applicants. DSCR programs typically require 640 to 680. Hard money lenders focus on collateral value and may accept lower scores.
Debt Service Coverage Ratio: Most lenders require a DSCR of at least 1.20x to 1.25x. Some DSCR loan programs allow ratios as low as 0.75x for investors willing to accept higher rates. Use our DSCR calculator to estimate your property's coverage ratio.
Property Documentation: Borrowers should expect to provide trailing 12-month operating statements, current rent rolls, two to three years of tax returns (for non-DSCR loans), environmental reports, and a commercial appraisal. San Jose-specific considerations include seismic retrofit requirements (particularly for pre-1980 buildings) and CEQA compliance documentation.
Experience: For bridge and construction loans, lenders prefer borrowers with a track record of successful projects. First-time investors may face higher rates or lower leverage, though SBA and DSCR programs are more accessible to newcomers.
Ready to discuss your specific situation? Contact our team for a personalized loan analysis based on your San Jose property and investment goals.
How Does San Jose Compare to Other Bay Area and California Markets?
San Jose occupies a distinctive position within the California commercial real estate landscape. As the largest city in the Bay Area by population and the heart of Silicon Valley, it offers a unique combination of tech-driven demand, institutional-quality assets, and urban growth potential.
San Jose's multifamily market is notably tight at 4.8% vacancy, outperforming the national average of 8.4%. Cap rates for Class A multifamily sit at 4.74%, reflecting the premium investors place on Silicon Valley rental demand.
The office market presents a nuanced picture. While Downtown San Jose's 30.6% vacancy trails San Francisco's challenged downtown, the broader South Bay office market improved to 15.9% vacancy as of Q2 2025. AI and enterprise software sectors are driving recovery that favors modern, well-amenitized buildings.
Industrially, San Jose commands some of the highest prices in the nation at $370 to $475 per square foot, compared to a $142 national average. This premium reflects extreme land scarcity and strong demand for R&D, light manufacturing, and data center space.
From a lending perspective, San Jose's high property values mean larger absolute loan amounts, which can unlock more competitive rate tiers from portfolio lenders and CMBS originators.
What Role Does the Tech Sector Play in San Jose Commercial Lending?
The technology sector is not merely an influence on San Jose's commercial real estate market; it is the fundamental driver. Roughly 30% of total employment in the metro area is in tech, with 385,000 tech jobs generating annual GDP contributions exceeding $275 billion. The city serves as the headquarters or major campus location for Apple, Google, Cisco, Adobe, PayPal, eBay, and Zoom, among hundreds of other technology companies.
This concentration creates several dynamics that directly affect commercial lending decisions.
Tech employment drives multifamily demand. High-earning workers sustain occupancy and rent growth across San Jose, and lenders view local multifamily as among the most creditworthy asset classes in California, reflected in lower rates and higher LTV ratios.
The rise of artificial intelligence is reshaping office demand. While remote work reduced overall office utilization post-pandemic, AI companies are signing large new leases for collaborative workspace. Modern, amenity-rich buildings in prime locations are stabilizing faster than older commodity space.
Approximately 35% of venture capital investment in the United States flows into San Jose-area companies. This capital formation creates a constant pipeline of growing firms that need commercial space, from early-stage startups to growth-stage companies acquiring entire campuses.
For borrowers, the tech sector's influence means lenders are generally comfortable with San Jose commercial real estate as collateral, provided the property is well-located. Properties near major tech campuses, transit stations (BART and VTA light rail), and lifestyle amenities tend to receive the most favorable financing terms.
What Are the Most Common Questions About Commercial Loans in San Jose?
What is the minimum down payment for a commercial loan in San Jose?
SBA 7(a) and SBA 504 loans allow down payments as low as 10% for owner-occupied commercial properties. Conventional commercial mortgages typically require 25% to 35% down, while DSCR loans generally require 20% to 25%. Given San Jose's high property values (industrial space averages $370 or more per square foot), even a 10% down payment on a $5 million property represents $500,000 in equity, so planning your capitalization strategy early is essential.
How long does it take to close a commercial loan in San Jose?
Conventional commercial mortgages typically close in 30 to 60 days. SBA loans may take 60 to 90 days due to additional underwriting requirements. Bridge and hard money loans can close in as little as 7 to 14 days, making them valuable for competitive bidding situations. In San Jose's fast-moving market, having a pre-qualification letter gives you a significant edge when competing for desirable properties.
What DSCR ratio do San Jose lenders require?
Most lenders require a minimum DSCR of 1.20x to 1.25x for conventional commercial loans. Some DSCR-specific programs consider ratios as low as 0.75x, though borrowers should expect higher rates and larger down payments at lower coverage levels. For multifamily, lenders may apply more favorable underwriting given the 4.8% vacancy rate and consistent rental demand driven by Silicon Valley employment.
Can I use an SBA loan to buy commercial property in San Jose?
Yes. The SBA 7(a) program provides up to $5 million with as little as 10% down, while the SBA 504 program can finance up to $20 million for real estate and equipment. The key requirement is that the borrower must occupy at least 51% of the building. With over $77 million in SBA loans issued locally in recent years, San Jose has a robust network of SBA-approved lenders familiar with the local market.
Are commercial loan rates in San Jose higher than other California cities?
Commercial loan rates are primarily driven by national capital markets, Treasury yields, and Federal Reserve policy, so base rates in San Jose are comparable to San Francisco, Los Angeles, or San Diego. However, property-specific factors like asset quality, occupancy, and borrower credit profile create meaningful variation. Stabilized multifamily and industrial properties in San Jose often qualify for among the most competitive rates in California due to strong fundamentals.
What property types are easiest to finance in San Jose right now?
Multifamily properties are the easiest to finance, thanks to the low 4.8% vacancy rate and strong rent growth from tech employment. Lenders offer the highest LTV ratios (up to 80%) and most competitive rates for well-occupied apartment buildings. Industrial properties also receive favorable treatment given price premiums ($370 or more per square foot) signaling strong fundamentals. Retail near Santana Row or Valley Fair is readily financeable. Office properties face the most scrutiny, especially Downtown, where lenders require stronger sponsorship and clear lease-up plans given the 30.6% vacancy rate.
Take the next step in your San Jose commercial real estate journey. Contact Clear House Lending today for a free consultation and rate quote tailored to your specific property and investment strategy.