"SAN JOSE A San Jose housing tower that once was touted by local leaders as a future lively downtown hub was foreclosed over a failed loan in a financial setback that shows the high-rise's value has nosedived. The Fay, at the corner of South Market Street and East Reed Street, was seized by its lender, an affiliate of Madison Capital Realty, according to the results of a trustee's sale of the property on Jan. 28."
"The lender valued the property at $110 million when the financial firm took back the 363-unit tower at 10 East Reed St., as per the outcome of the trustee sale. The Fay being seized by its lender is another clear signal of how fragile high-rise housing economics have become in downtown San Jose, said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy. Long entitlement timelines, elevated construction costs, and higher interest rates leave very little margin for error, especially on tall buildings."
The Fay, a 23-story apartment tower at 10 East Reed Street in downtown San Jose, was seized by a lender affiliate of Madison Capital Realty after a trustee's sale on Jan. 28. The lender set the property value at $110 million when it took back the building, a decline of about 39.7% from the $182.5 million construction loan. Unit counts are reported between 336 and 363 units. The tower occupies a key gateway to downtown in the SoFA district near Interstate 280 and offers broad views. The parcel sold for $16.5 million in 2020 and the project obtained a $182.5 million construction loan in 2021. Long entitlement timelines, elevated construction costs, and higher interest rates are cited as squeezing margins on tall residential projects.
Read at www.mercurynews.com
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