Essex Property Trust, one of West Coast’s largest apartment REITs just closed on the purchase of the 213-unit apartment complex, 360 Residences, for $133.5 million, or roughly $626,760 per unit, according to a report by the Silicon Valley Business Journal. The seller was Chicago-based Capri Capital Partners, which purchased the building in 2012 for $118 million, or $553,990 per unit.
The 23-story property sits close to the epicenter of downtown San Jose’s urban activity. It is across the street from the San Jose McEnery Convention Center and just a block away from the city’s Plaza de Cesar Chavez, which is home to the Fairmont Hotel, The Tech Museum of Innovation and the San Jose Museum of Art.
According to the report, Capri made the investment as a long-term hold, however given its observation of the pent-up demand in the market it saw an opportunity to test the market and claim profits on the property. Essex, on the other hand may be winding down some of its acquisition efforts following this purchase, and this property may be one of the last ones the San Mateo company acquires for the foreseeable future. According to the company’s recent quarterly investor call, this was one of three properties that Essex had under contract and which it was planning to close by end of the year, according to John Eudy, co-chief investment officer. That will bring the investment for the year to approximately $500 million, in line with with its target of $400 million to $600 million.
But, “beyond that the pipeline is very, very skinny,” said Eudy during the call. “We are looking at a couple of other opportunities … but clearly a year from now if you look at our pipeline in process, it will be significantly less than it is now.”
The main reasons for this, according to the statements are the anticipated slower job growth across the West Coast. The company is already seeing it in Souther California and expects it to be the same in Northern California, as well. Event though market rents in the Bay Area have increased, occupancy has actually decreased, Essex stated.
Yet, part of the appeal for San Jose is the growth that the self-proclaimed capital of Silicon Valley may experience in the years to come as Google and Adobe look to expand their operations in the city and help grow the population and the economic based of the region.