Grosvenor Buys San Jose Apartment Complex for $160MM

Grosvenor Americas, San Jose, Silicon Valley, San Francisco, Carlmont Woods Apartments, Waterstone San Jose, Belmont, Bay Area, Marcus & Millichap

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As housing continues to be of very limited supply across the region, more investors are buying into the market where demand seems unabated. Grosvenor Americas, the U.S. arm of the English investment firm that was founded in the 1600s, which today is active in some of the world’s most dynamic cities, just spend $160 million to purchase Waterstone San Jose, a 432-unit apartment complex in Silicon Valley. The sale brings the per-unit cost of the property to just over $370,000.

[contextly_sidebar id=”kUVxNGVm6qkyNBlXewrL7fDHaafYUlEl”]The sale, which was reported by the Silicon Valley Business Journal, is the firm’s first in Silicon Valley. On top of the initial investment, Grosvenor also plans to place another $16 million into the complex for renovations.

The seller was the Palo Alto-based Pacific Urban Residential, who sold the property through its listing agent, the Palo Alto office of Institutional Property Advisors. The people involved in the sale were Stan Jones, executive vice president of investments, and Sal Saglimbeni, vice president of investments.

Grosvenor has had its eye on residential developments in the region in recent past. In April of this year, the firm announced that it had provided financing for two residential developments in San Francisco, one at 815 Tennessee Street and the other at 2290 3rd Street, worth $35.5 million.

In August of 2013, the firm had also acquired Carlmont Woods Apartments in Belmont, an 11.5-acre garden apartment community with 195 studio and one-bedroom apartments was built in 1971 for which the firm paid $50 million, or $256,410 per unit. That was the firm’s first apartment acquisition in the Bay Area. “This is Grosvenor’s first apartment acquisition in the Bay Area,” remarked James Delmotte, senior vice president, Investment, Grosvenor Americas at the time. “We hope to continue to grow our multifamily portfolio in the future.”

With the Waterstone acquisition, the firm seems to be following a familiar path. Like the Carlmont Woods Apartment complex in Belmont, San Jose’s Waterstone is similarly designed as a garden complex with private patios and balconies. It is a property that was designed in the 1980s and one where the firm will make an investment to update the setting and add value to the complex.

According to rent.com, one-bedroom apartments in the complex range in rent from $2,012 to $2,728 ,the two-bedroom apartments rent from $2,572 to $3,201, while the three-bedroom apartments start at $2,918. None are available for rent, although the property managers stated there is some availability.

According to a recent, third quarter of 2015 Marcus & Millichap apartment research market report, vacancy is hitting an ultra low level in Silicon Valley. This is driven by continued growth in employment, more than 49,000 hew hires were made last year, according to the report, while vacancy had dropped 20 basis points to 3.3 percent. At the same time, rents have surged 9.1 percent to an average of $2,499 per month following an 11 percent increase in 2014.

West Coast Commercial Real Estate News