{"id":154055,"date":"2026-01-28T23:39:09","date_gmt":"2026-01-28T23:39:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/154055\/"},"modified":"2026-01-28T23:39:09","modified_gmt":"2026-01-28T23:39:09","slug":"san-jose-housing-tower-is-foreclosed-in-new-bay-area-apartment-setback-2","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/154055\/","title":{"rendered":"San Jose housing tower is foreclosed in new Bay Area apartment setback"},"content":{"rendered":"

SAN JOSE \u2014 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\u2019s value has nosedived.<\/p>\n

The Fay<\/a>, 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\u2019s sale of the property on Jan. 28.<\/p>\n

\"RooftopRooftop pool at The Fay, a 23-story, 336-unit apartment tower at 10 East Reed Street in downtown San Jose.\u00a0(George Avalos\/Bay Area News Group)<\/p>\n

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.<\/p>\n

\u201cThe Fay being seized by its lender is another clear signal of how fragile high-rise housing economics have become in downtown San Jose,\u201d said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy. \u201cLong entitlement timelines, elevated construction costs, and higher interest rates leave very little margin for error, especially on tall buildings.\u201d<\/p>\n

\"AA view of downtown San Jose from one of the upper floors of The Fay housing tower.\u00a0(George Avalos\/Bay Area News Group)<\/p>\n

The 23-story apartment complex is perched at a key gateway to downtown in the city\u2019s SoFA district, a hub of restaurants, nightclubs, cocktail lounges, shops, arts and culture sites, and live entertainment venues.<\/p>\n

In 2020, an affiliate of residential developer Scape paid $16.5 million<\/a> to buy a parcel that it eventually developed into the tower, which is next to Interstate 280 and commands striking views in all directions.<\/p>\n

In 2021, England-based real estate firm Scape obtained a $182.5 million construction loan from Madison Realty to finance the tower\u2019s construction, Santa Clara County property documents show.<\/p>\n

The $110 million price that the lender placed on the property in order to foreclose on the tower\u2019s loan means the high-rise\u2019s value has plummeted 39.7% below the loan amount.<\/p>\n

Now, the lender must decide on the next steps for The Fay, which could mean Madison Capital might scout for a new owner. Lenders typically prefer to remove foreclosed properties from their books as soon as possible.<\/p>\n

The Fay\u2019s foreclosure stands in sharp contrast to the cheery outlook for the high-rise in December 2024, when a grand opening was held to celebrate its launch<\/a>.<\/p>\n

San Jose officials expressed hope at the time that the hundreds of people who would potentially live in The Fay would be able to contribute to a more lively downtown.<\/p>\n

The Fay, however, is only about half full, primarily due to a lack of parking for its residents, according to a real estate executive who has crafted underwriting scenarios for the housing tower.<\/p>\n

The executive, who requested anonymity due to not being authorized to speak publicly about the situation, believes the tower might be worth even less than $100 million.<\/p>\n

For the moment, the Fay\u2019s financial failure helps to create a murky situation regarding near-term development in downtown San Jose.<\/p>\n

\u201cIt raises real questions about how many downtown towers can realistically move forward under today\u2019s conditions,\u201d Staedler said. \u201cUntil costs come down and financing stabilizes, getting new high-rise projects off the ground will remain a serious challenge.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"SAN JOSE \u2014 A San Jose housing tower that once was touted by local leaders as a future…\n","protected":false},"author":2,"featured_media":153809,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[29],"tags":[184,387,7,3010,1335,4978,383,1337,181,100,388,88,90,89,198,200,1970],"class_list":{"0":"post-154055","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-san-jose","8":"tag-bay-area","9":"tag-business","10":"tag-california","11":"tag-commercial-real-estate","12":"tag-development","13":"tag-downtown-san-jose","14":"tag-economy","15":"tag-housing-development","16":"tag-latest-headlines","17":"tag-news","18":"tag-real-estate","19":"tag-san-jose","20":"tag-san-jose-headlines","21":"tag-san-jose-news","22":"tag-santa-clara-county","23":"tag-south-bay","24":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/154055","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=154055"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/154055\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/153809"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=154055"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=154055"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=154055"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}