By Jon Peterson
Arlington, Va.-based AvalonBay Communities has started construction on the development of its 252-unit Avalon Dublin Station II in Dublin located at 5200 Iron Horse Parkway. The total capital cost of this project is $83.7 million, according to AvalonBay’s supplemental report from its second quarter 2014 results.[contextly_sidebar id=”Tsy9bJqzq2QYnf5K9WDsVXDgzXPIeSB5″]AvalonBay is a big believer in the East Bay market for apartments in the San Francisco Bay Area. “We think that the East Bay apartment market is a good apartment market for us to conduct business in. We think that it is attracting spill over interest from markets like San Francisco and Silicon Valley where rents are much higher. The East Bay is a niche market for us,” says Jason Reilly, director of investor relations for AvalonBay.
AvalonBay will be funding the new development with its own capital, which is not atypical for the publicly traded REIT when it owns a project all by itself.
AvalonBay started construction on Dublin Station II during the second quarter. The initial occupancy is planned for the first quarter of 2016 with a completion one quarter later and having the project being a full quarter stabilized by the four quarter of the same year. The average rent for the project is projected to be $2,390 per month. This property is close to the Dublin BART station. AvalonBay always looks for projects that are closed to public transportation venues.
Dublin Station II is one of four apartment developments started by AvalonBay during the second quarter. All of the communities are located in California, with the other three located in Southern California in Irvine, Huntington Beach and West Hollywood. These assets total 1,080 units with a combined total capital cost of $421.4 million.
AvalonBay has a significant presence in the Oakland/East Bay area. The number of apartment units it owns in the region is 3,040. The current economic occupancy of this portfolio is 96.7 percent. The public REIT also owns 2,894 units in San Francisco and 3,295 units in San Jose.
The real estate fundamentals for the apartment market in Dublin remain very strong. According to data supplied by RealFacts, a San Francisco-based apartment research firm, rents for apartments in Dublin have increased by 12.3 percent from the second quarter of 2013 to the second quarter of 2014 to an average asking price of $2,279 per month.
Occupancy on apartments for Dublin have held strong over the same time period. RealFacts data have the average occupancy rate going from 96.9 percent to 97.3 percent. “I think that these figures show that there is a strong demand for apartments in Dublin as many renters are looking at this city as less expensive alterative to San Francisco and Silicon Valley, says Nick Grotjahn, sales and client services representative for RealFacts.
Map courtesy of Apple