By Meghan Hall
A sizable multifamily portfolio has hit the market in Santa Rosa and Rohnert Park, just north of San Francisco, providing interested investors with an opportunity to break into a growing commercial real estate market. Dubbed “The North Bay Portfolio,” the five property, 406-unit portfolio is being sold by entities affiliated with Petaluma, Calif.-based Kadami Enterprises, a property management company, and Genaro Mendoza, of WCGM Properties LLC.
Colliers has been retained by the seller to market the properties for sale. Guidance pricing for the portfolio was not disclosed. The goal is to sell all five assets together, although Colliers stated WCGM may be willing to sell the assets separately.
“The opportunity to purchase a large portfolio in one market and have immediate scale is extremely rare,” explained Colliers Vice President of Multifamily, Gavin McDowell.
The five properties up for sale include:
- The Pioneer Apartments at 2010-2015 Pioneer Way. The asset totals 178 units.
- The Marlow Apartments, at 3076 Marlow Road, which includes 116 units. Public records indicate that the property last traded hands in March of this year, and was acquired for $27 million, or about $232758 per unit. The asset was purchased from Flynn Family Holdings.
- The Palms Apartments at 128 Santa Alicia Drive. The asset totals 60 units.
- The El Prado Apartments, which includes 32 units and is located at 1620 Herbert Street.
- The Evans Drive Apartments. Located at 1109 Evans Drive, the asset has 20 units.
The majority of the portfolio–or 73 percent–was initially constructed in 1984. In all, the property totals 292,309 square feet. About 40 percent of the portfolio is made up of two-bedroom units. Colliers also notes that more than $2 million has been spent on recent capital upgrades to the property.
Currently, the portfolio is 98.3 percent occupied, and current rents across the portfolio are about $2.44 per square foot. According to Colliers, the property features immediate scale; the portfolio’s buyer can increase rents to $2.79 per square foot, and with a minor renovation program, estimates that rents can be pushed further, up to $2.97 per square foot.
Additionally, Santa Rosa is increasingly becoming a high barrier market, and multifamily fundamentals are expected to get stronger in the future. Year-over-year, asking rents in Santa Rosa have increased by 7.2 percent, and rents are expected to grow 4.6 percent through 2025.
A number of factors are influencing the market, including increased demand for rental housing in the area. Vacancy in the area sits at 2.9 percent, and is expected to compress further over the next year. Currently, the North Bay–where Santa Rosa and Rohnert Park are located–has 74,347 multifamily units.
“The Santa Rosa MSA is expected to have extremely low vacancy and robust market rent growth over the next four years,” said McDowell. “With minimal new stock in the pipeline, the multifamily market fundamentals are excellent.”