Since the start of the COVID-19 pandemic, most of the early attention in multifamily housing was focused on eviction moratoria and the landlords’ abilities to collect rent on a timely basis. Many predicted the sector would suffer massive losses, and one could conclude that valuations of these assets would quickly fall, as well.
However, over the past twelve months, according to a recent report from Cushman & Wakefield, the multifamily market across the greater Bay Area continued to see a lot of activity. 13,458 market-rate units transacted in the period from October 2020 to October 2021, representing a total dollar volume of $4.4 billion. The markets where these sales were tabulated included East Bay (Alameda & Contra Costa Counties), North Bay (Marin, Napa, Solano & Sonoma Counties), Sacramento region (Sacramento, El Dorado, Yolo & Placer Counties), San Francisco County, Santa Clara County in Silicon Valley and San Mateo County on the Peninsula.
The sales summary takes into account apartment communities of 50 units or more of Class A, B & C types of properties.
San Francisco (DOWNLOAD REPORT)
San Francisco County recorded the smallest number of units sold. A total of 226 units transacted in the period recorded for a total of $89.3 million. Only two properties sold in the year from October 2020 to October 2021 in the city, and both properties were Class B buildings. In December of 2020, Waterton Associates spent $72.5 million, or $470,779 per unit, to acquire the 154-unit Delphine on Diamond from Avalon Bay Communities. The second transaction was in September of 2021 when Veritas Investments purchased the 72-unit 1649-1655 Market Street in San Francisco for $16.8 million, or $233,333 per unit.
Silicon Valley (Santa Clara County) (DOWNLOAD REPORT)
Across Silicon Valley, eight transactions totaling 776 market-rate units for a total of $359.9 million traded hands, according to the report. The largest of these was Summerhill Homes’ December 2020 acquisition of the 116-unit Meadowood Apartments in Mountain View for $81 million, or $698,276 per unit. The seller was Calson Properties. Two properties traded in the $50-million range, and they included the 130-unit Landmark in Sunnyvale, which was purchased by Summerhill Homes from Pacific Urban Residential for $58 million, or $446,154 per unit, in October of 2020 and the 101-unit One38 in San Jose, which was purchased by Carmel Partners in October 2021 for $53.45 million, or $529,208 per unit. The seller was SiliconSage Builders. The remaining transactions were all in the $20-million to $40-million range, while two affordable housing properties traded in the teen-million range.
Peninsula (San Mateo County) (DOWNLOAD REPORT)
Five market-rate properties traded hands in San Mateo County in the 13 months from start of October 2020 until the end of October 2021. Four of them were Class A properties, and one property was a Class C building.
The highest of these transactions was the 197-unit Park 20 sale in San Mateo. Virtu Investments paid $113 million, or $573,604 per door, in March of 2021. The seller was Essex Property Trust. In November of 2020, Sares-Regis Group paid $80.1 million, or $721,171 per door, to acquire the 111-unit Mode By Alta also in San Mateo. Land and Houses U.S.A. was the seller. That same month, Jay Paul Company paid $73.5 million, or $816,667 per unit, to acquire the 90-unit Encore in Redwood City from Sares-Regis Group. Just north in Pacifica, KH Equities paid $62.9 million, or $370,003 per unit, to buy the 170-unit Villages at Pacifica from Arjun Bhagat in January 2021.
The smallest of the deals in San Mateo County was the $33.6 million, or $466,667 per unit, sale of 72-unit Pacific Place in Daly City, which Cumberland Holdings purchased from MG Properties Group. This deal closed in May of 2021.
East Bay (Alameda & Contra Costa Counties) (DOWNLOAD REPORT)
Alameda and Contra Costa Counties recorded the second-highest number of market-rate transactions for properties over 50 units, although in dollar volume, this was the highest of the six regions recorded in the report at $1.68 billion. 25 properties traded in the period from October 2020 to October 2021, totaling 4,109 units. In addition, five affordable assets transacted in the same period, which were not counted in the maker-rate totals, and they accounted for an additional 470 units for a total of $180 million.
The largest of the market rate deals was the sale of the 390-unit Waterford Place in Dublin. This property was purchased in August of 2021 by California Statewide Communities Development Authority for $208.5 million, or $534,615 per unit, and the seller was UBS Realty Advisors.
There were five other $100 million or more sales in the East Bay for market-rate communities during this timeframe. Catalyst Housing Group spent $190 million, or $586,420 per door, to acquire from Equity Residential the 324-unit Fountains at Emerald Park in Dublin in August of 2021. In April of 2021, Catalyst Housing Group also purchased the 313-unit Aster in Dublin for $163 million, or $520,767 per unit. The seller was Bay West Properties. The month before, in March of 2021, Catalyst spent an additional $128.75 million, or $416,667 per door, to acquire the 309-unit Creekwood in Hayward from Bridge Investment Group. Those deals were followed by another Catalyst acquisition, also in August of this year, of the Exchange at Bayfront, a 172-unit community in Hercules, for which the company paid $113.5 million, or $659,884 per unit. The seller was Ledcor Group. Finally, hitting $100 million, HCF Development bought for that amount the 176-unit K Street Flats in Berkeley. BlackRock sold the property for $568,182 per unit in October of 2021.
North Bay (Marin, Napa, Solano & Sonoma Counties) (DOWNLOAD REPORT)
In the North Bay, 10 deals were consummated in the recorded time period, trading 1,804 units for a total of $684.1 million. Three deals broke the $100 million threshold, of which the largest was Catalyst buying the 198-unit Summit at Sausalito in September of 2021. Equity Residential sold the property for $122 million, or $616,162 per unit. Opportunity Housing Group spent $117.5 million, or $424,188 per unit, for the 277-unit Acacia on Santa Rosa Creek in Santa Rosa. The sale closed in October of 2021, and the seller was a venture between Greystar and APG Asset Management. In December of 2020, Pacific Urban Residential paid $106 million, or $417,323 per unit, to buy the 254-unit View at Marin asset from Avalon Bay Communities.
Sacramento (Sacramento, El Dorado, Yolo & Placer Counties) (DOWNLOAD REPORT)
The Sacramento region saw the largest number of market-rate transactions and number of units traded during the October 2020 to October 2021 period. 5,903 units traded across 37 assets for a total of $1.257 billion. In addition, four affordable housing properties traded in the same period for a total of 450 units and a sales volume of $64.35 million.
Deal size was typically smaller in this market compared to the other five Northern California markets, but two sales did hit over $100 million. The largest of these was the Kennedy Wilson acquisition of the 410-unit Autumn Ridge in Citrus Heights, for which the company paid $120 million, or $292,683 per door. The seller was Oakmont Properties, and the transaction closed in August of 2021. The second-largest deal was the July of 2021 sale of the 300-unit Harvest at Fiddyment Ranch in Roseville. For that, Bridge Partners paid $111.35 million, or $371,152 per unit, to acquire the property from USA Properties Fund in June of 2021.