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 23-story apartment complex is perched at a key gateway to downtown in the city’s SoFA district, a hub of restaurants, nightclubs, cocktail lounges, shops, arts and culture sites, and live entertainment venues…