Troubled San Jose housing tower switches gears from sales to rentals

SAN JOSE — The owner of a San Jose housing tower that is mired in a thicket of lawsuits and legal complaints is now attempting to rent, rather than sell, the units in the highrise.

The residential building at 188 West St. James Street in downtown San Jose is one of two highrises in a double-tower housing complex developed by an entity operating as FPP MB. FPP is an affiliate of China-based real estate firm Z&L Properties.

Starting in early 2022, the tower owner began selling the condos in the western tower of the 188 West St. James housing complex. By mid-2023, the owner had sold approximately 100 units. The two towers are in the lively San Pedro Square area.

Yet by July 2023, the sales of the condos came to a halt, public documents on file with a Santa Clara County court and the County Recorder’s Office show. Since July 2023, no recorded condo sales have been on file with the county property transactions office.

Now, the owner’s strategy is to find tenants to rent the approximately 200 remaining units.

Tripalink, whose website states it helps renters find “contemporary living” residences, is the company that is seeking tenants for the condominiums.

Two months of free rent are being offered to entice people to lease units in the western tower at 188 West St. James, according to the website that Tripalink has established as the online hub for the rental efforts at 188 West St. James.

The free rent is being described as a “special offer” that is slated to expire on Nov. 30. A previous offer of two months of free rent had been slated to expire around mid-October.

“The pivot from selling condos to renting makes a lot of sense right now,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy.

Rentals would create cash flow for the current owner and could make the tower more attractive to another buyer.

Both towers have been put up for sale but have yet to be officially sold.

The leasing appears to have gained traction, according to Staedler, who took a tour and was told by a rental representative that units are being rented at a brisk pace.

Rental rates range from $8,333 to $10,000 a month, according to the Apartments.com website. However, Tripalink states that some units are being offered for up to $12,000 a month.

The Tripalink site does note that the $10,000 a month is for a three-bedroom, 2.5-bath unit and that the effective rent per person would be $3,333 a month.

All of this is happening at a time when FPP MB, the property owner, is entangled in a web of lawsuits tied to the western tower of the 188 West St. James complex.

The legal battles involve disagreements over two major areas of contention.

One legal flashpoint arises from the tower owner’s attempt to negate the auctions of several for-sale condos in the western tower. The condos were put up for auction after homeowners association dues for the condos became delinquent.

Another point of legal conflict involves claims by some homeowners that living conditions in the western tower are “dangerous” in some instances, according to a legal filing. The alleged examples include a lack of hot water, heat and air conditioning, along with thefts and poor security, court papers state.

“Petitioners (the HOA members) contend that until recently one of the three elevators has commonly been out of service, the building’s boiler system was not set up properly and was not properly maintained, there is frequent flooding in the below-ground garages, and the boiler and HVAC systems were not properly installed, tested, or maintained,” FPP stated in the court filing. “All of these issues are being addressed.”

The litigation is far from settled. As many as nine hearings, stretching into the spring of 2025, are scheduled in the case. A judgment on the legal claims could occur in December, according to the current court docket. A decision on sanctions, if necessary, could occur in January.

Despite the legal woes, the move to renting units and getting them filled with residents will help not only the finances of the development, but also bolster economic activity in the area, in Staedler’s view. He recently toured some of the units being offered for rent.

“Filling up the west tower will increase the daytime and nighttime population of downtown San Jose and increase the vibrancy of the San Pedro Square area,” Staedler said. “Hopefully, this incentivizes them to finish the east tower.”