As the Bay Area real estate market continues to find its footing in 2022, the multifamily sector has been doing relatively well. According to industry reporting, the conditions for the multifamily market, in general, have been improving, which has spurred a private group to place on the market a 42-unit asset in San Francisco located at 625 Scott Street. The asking price, according to Vanguard Properties, who is listing the sale, is $20 million, or $476,190 per unit.
The building is a six-story property built in 1928 and located next to the city’s famed Alamo Square Park. It offers a mix of 12 one-bedroom and 30 studio apartments, as well as parking for 13 cars. The property has been well maintained over its lifespan, according to the property’s web page, including nearly $600,000 spent on various upgrades and repairs over the last couple of years. Those upgrades were to the windows throughout the building, exterior waterproofing, upgraded fire alarm system and fire escapes, as well as significant elevator improvements.
Many of the units feature hardwood floors and updated kitchens and bathrooms, and the apartments on the front of the building feature direct views of Alamo Square Park.
The seller of the property is a private family partnership called The Delta Group comprised of several families.
The conditions across the region are starting to look up for the multifamily sector, according to a recent Marcus & Millichap second quarter of 2022 market report. Metro employers added 14,100 positions during the first two months of this year and are expected to bolster San Francisco’s job count by 6.6 percent in 2022, stated the report. Marcus & Millichap sees this rate of employment growth as the second-highest increase among major markets in the country. At the same time, the vacancy in 2022 has been decreasing with renters absorbing 4,400 units, pushing vacancy to 6.3 percent in San Francisco, which is 100 basis points above the year-end 2019 mark
Rent has been steadily on rising, as well. Two consecutive years of historically strong rate gains pushed the metro’s average monthly rent beyond $3,000, according to Marcus & Millichap.
As apartment fundamentals improve and major employers commit to office returns, more investors are shifting their attention back to San Francisco, stated the report. As a result, annual deal flow more than doubled since last year, although most of the trades were in the $1 million to $10 million tranche. While institutional investors have yet to return in force, average per-unit sales levels hit $449,000 with cap rates holding steady at around 4.1 percent.
