By Jon Peterson
Arlington, Va.-based AvalonBay Communities has started the development of the 326-unit Avalon Dogpatch apartment development in San Francisco, according to the company’s 2015 fourth quarter results. The total capital cost for this project is projected to be $203.4 million.
AvalonBay did not respond to several phone calls seeking comment beyond what it has publicly stated about the development. The company will be funding this project with its own capital.[contextly_sidebar id=”KtjoFV5N5trdIXoF8gtBMz0Ed9oGpCKm”]The publicly-traded REIT is planning to finish the development of the Dogpatch project by the third quarter of 2018. The initial occupancy for the project is expected sometime during the fourth quarter of next year, and its first full quarter of stabilization will likely be the first quarter of 2019. The average rent per apartment unit is projected to be $4,450 per month.
The San Francisco apartment market did have a good amount of rental rate growth over the past year.
According to data from Novato-based Real Answers, the average asking rent for apartments in San Francisco grew by 6 percent over the past 12 months from $3,392 per month to $3,616. Over the same time period the occupancy in the market dropped by 1.2 percent. It was at 95.6 percent at the end of 2014 and was lowered to 94.4 percent 12 months later.
AvalonBay has a very large presence in the San Francisco market. Through the end of 2015, it owned a portfolio of apartments in the region totaling 2,894 units. The overall occupancy in the market of this portfolio was 95.4 percent. These assets are part of 9,201 units that the REIT owns in Northern California.
The other assets are 3,373 units in San Jose and 2,934 units in Oakland/East Bay.