A lender has taken ownership of a vacant property in downtown San Jose that was once slated for a housing tower, highlighting ongoing economic challenges in the Bay Area real estate market. The site, located at 27 South First Street, underwent a foreclosure process that allows lenders to reclaim properties more efficiently.
The parcel had been proposed for a 24-story residential tower featuring 374 units. Despite receiving approval from city officials, the project led by Alterra Worldwide and executives Tony Bader and Mike Sarimsakci never materialized, largely due to unsuccessful funding efforts. The building has remained vacant since 2016, when retail chain Ross Dress for Less closed its store there.
The foreclosure was finalized on October 27, 2023, with documentation indicating an unpaid debt of $13.9 million. The loan that led to this situation was provided by Copia Lending, which shares office space with the new property owner, TDA Investment Group.
Challenges Facing Development in Downtown San Jose
According to Bob Staedler, principal executive at Silicon Valley Synergy, the site is notably difficult for development. The narrowest section measures only 78 feet wide, surrounded by other properties, complicating any potential construction plans.
In a bid to finance the housing tower, the developers attempted to raise $100 million in 2021 through a security token offering, a digital investment method allowing for fractional ownership in the project. Unfortunately, these initiatives did not yield the necessary capital, leaving the property in its current state of disrepair.
Before its time as a retail space, the building was home to an F.W. Woolworth Co. store, illustrating its long history within the community. After Ross’s departure, it briefly served as a pop-up venue for local artists through the Local Color organization.
The future of the property remains uncertain. It is likely that any plans for development would require assembling adjacent parcels to create a more viable project. Staedler suggests that leasing the property could be a prudent short-term strategy while awaiting a larger redevelopment opportunity.
The current situation reflects broader trends within the Bay Area, where economic indicators suggest pockets of weakness in the property market continue to emerge. As the region navigates these challenges, the fate of the former housing project site at 27 South First Street will remain a focal point for both local officials and potential developers.
