The assessed value of real estate in Santa Clara County grew sluggishly this year, largely due to persistent issues in the commercial real estate market, according to a new report from the county assessor’s office.
While the net value of all properties as of Jan. 1, 2025, reached a record $725.7 billion, the 2025-2026 assessment roll increased by just 4.15%, up $28.9 billion from the previous year – its slowest growth since 2012.
The rise of remote work, office vacancies and delinquencies, among other challenges, have rocked the commercial real estate sector in Silicon Valley and nationwide in recent years.
“COVID disrupted practically everything in life, and property values were not immune to that,” said County Assessor Larry Stone.
According to the report, the office vacancy rate in Silicon Valley has remained at about 20% for the past two years.
Additionally, significant layoffs in the tech industry have created a negative feedback loop, contributing to increased vacancies and declining rental rates, Stone added.
In the first half of 2025, more than 70,000 tech employees were laid off; last year, more than 150,000 employees were terminated, according to data compiled by Layoffs.fyi.
The five cities with the lowest rate of growth were Mountain View, Sunnyvale, Milpitas, Cupertino and San Jose. In the previous year, Mountain View had the highest percentage of roll growth, but this year it saw a steep dropoff as it is “heavily engaged in commercial properties, office buildings, R&D buildings, those kinds of things,” said Stone.
On the flip side, the city with the highest rate of growth – Morgan Hill – benefitted from its stable residential property values.
Another city that fared well – Santa Clara – saw growth driven by an increased investment in data centers, said Stone. According to the Data Center Map, Santa Clara currently has 75 data centers, the most in California.
“Data centers are hot and they’re getting hotter,” Stone added. As the artificial intelligence sector continues to grow, companies are pouring massive amounts of money into building data centers across the country.
The main sources of roll growth this year were changes in ownership, particularly residential transactions, and Prop 13 2% property tax increases for properties that didn’t change hands or experience new construction, according to the report.
The limited property assessments and taxes from Prop 13 come to the detriment of Santa Clara County schools. Some local districts, including in Mountain View and Palo Alto, are primarily funded with local property tax revenue.
New construction also added to the roll growth; however, it contributed 34% less growth than it did last year.
The report lists several commercial development projects that have experienced significant delays due to “high interest rates, rising construction costs, and a decreased demand for office space.”
Reductions in the commercial real estate sector decreased the roll by $4.5 billion.
Any value added by business properties were offset by an increase in exemptions, roll corrections and Prop 8 reductions, whereby property owners can apply for a temporary reduction in the assessed value of their property when its value is in decline.
On June 30, Santa Clara County sent out nearly 500,000 Notification of Assessed Value cards, notifying property owners of their property’s 2025 assessed value. Once they receive their NAV cards, property owners have until Aug. 1 to informally appeal and Sept. 15 to apply for an official Prop 8 reduction.
Ninety-eight percent of the more than $100 billion in assessed value currently under appeal is commercial property, according to the county assessor’s office, which expects the number of appeals filed this year to increase.
Despite the economic uncertainty and talk of a looming recession, Stone said he thinks the future of Silicon Valley is “bright” and that the region has “a special kind of resilience.”
“In my term as the assessor, and even when I was in the real estate investment business before this, I’ve been through the [Savings and Loan] debacle of 1990, the dot-com bust in 2000, the great recession in 2008, the COVID recession, which was not a real estate recession, it was a medical recession, and now [this],” said Stone, whose 30-year tenure as county assessor ended this month.
“So, we’ve been through these things before,” he added, noting that “80% of all [tech] R&D investment” occurs in Silicon Valley and that trillion-dollar companies headquartered in the region, like Apple and NVIDIA, continue to invest.
