By Jon Peterson
San Francisco-based Stockbridge Capital Group has made an equity investment of $130 million as part of a $320 million apartment development project in San Francisco known as 1629 Market, as stated by sources familiar with this project.
Stockbridge will be the majority owner of this property for one its separate account clients, as written by the pension fund manager in an email. Its development partner on the project is San Francisco-based Strada Investment Group. This company will have the option to sell its portion of the project once the development is completed. The project is planned to have a start date this December with the first move-ins by mid-year 2021.
The San Francisco team of HFF was the broker involved in the transaction. The HFF team consisted of Scott Bales, Charles Halladay, Jordan Angel and Peter Yorck.
The developers are looking to bring 420 units at the project over nine stories. The site is subject to a 99-year ground lease with Local 38 Plumbers & Pipefitters union of San Francisco, Marin, Sonoma, Mendocino and Lake Counties. This local union currently owns the site and is also headquartered in the existing 24,000 square foot office building on the premises. Local 38 will be getting a new office space as part of the project.
Stockbridge stated in an email that one of the attractions to the development is that it gives the developer an opportunity to participate in a project to produce 100 percent market-rate apartments, a rarity for new construction in San Francisco. The investment firm also likes that the project is located in a rapidly improving submarket with significant recent and future residential development, which will bring in high-income residents into the area and dramatically improve the street presence, walkability and appeal of the neighborhood.
Stockbridge is a big believer in the San Francisco apartment market. It wrote in an email that San Francisco has experienced average rent growth of 4.7 percent over the past 40 years and is driven by high barriers-to-entry and robust demand for both residential and the construction of office projects.