Atlanta, Ga.-based Pulte Homes is looking to the future of the Bay Area. The company acquired this week a five-acre parcel in Sunnyvale for $52 million from the Sobrato Family Foundation, according to public documents reviewed by The Registry. The lot, located at 1139 Karlstad Ave. is just south of State Route 237 and east of US Highway 101, at the top of Silicon Valley’s Golden Triangle, and it may be the only remaining developable parcel in this residential neighborhood.
The parcel is vacant at the moment, and according to reports, an industrial property was razed in the past to make way for redevelopment. Sobrato was given the green light to develop a 135-unit project on the property.
Pulte, which is coming off of an exceptional quarter that saw its revenues grow by 18 percent to $3.8 billion, will likely bring its own tweaks to the design in the project. The company may also utilize some of what Sobrato was able to attain, which is an approval for the development and permits that expire in May of 2023.
According to a recent, July of 2022 Yardi Matrix Multifamily Report for Silicon Valley, multifamily assets showed strong fundamentals approaching midyear 2022. The average rent reached a new high, up 1.8 percent on a trailing three-month basis through May, to $3,006, the report stated. At the same time, the occupancy rate in the region across stabilized properties was 95.4 percent, as of April. Unemployment also came in at a lowest rate in a decade at 2.2 percent, which outpaced both the national and state averages.
While it is not certain if Pulte’s final proposal will include a rental or for-sale product, the company is entering a market that is deeply supply-constrained. While Yardi does not break out the figures for Sunnyvale specifically, it reported that in San Jose and the surrounding submarkets, construction activity struggled to maintain momentum in the first five months of the year after reaching an all-time high in 2021. Developers were able to add only 522 units to the inventory.