By Meghan Hall
Foundry Commons, a 238-unit apartment complex located at the heart of San Jose, recently sold to Walnut Creek, Calif.-based real estate firm Tilden Properties and Seattle-based Bonney Watson, a mortuary company, for $110.3 million, or $463,445 per unit, at the end of December 2018, according to Santa Clara County public documents. The transaction comes as tech and professional firms have continued to express interest in the area driving down unemployment in San Jose and demand for housing up.
The two investors also obtained a $68 million loan from Bellwether Enterprises to finance the transaction. The sale was first reported by the San Jose Mercury News.
Located at 858 S. 5th St., the apartment complex is about a ten minute drive from downtown San Jose and is right off of Interstate 280. The development also sits in between San Jose State University and 156-acre Kelley Park. While mostly surrounded by residences and several small commercial businesses, the development is close to shopping and eateries at the Grand Century Shopping Mall.
San Jose has seen interest from investors over the course of the past year as suburban assets near corporate campuses continue to be in high demand. According to a 2018 Marcus and Millichap Investment Forecast, employment in San Jose was at its lowest in 17 years, after 12,000 workers were hired over the course of 2017. Combined with low interest rates and continuing job growth, the report sees San Jose metro is one of the best places to deploy capital.
The sale of Foundry Commons comes just weeks after San Jose city officials voted to sell 10.5 acres to Google in its downtown core for $110 million, where technology giant has plans to construct between a six- and eight million square foot campus with retail and housing that officials estimate could bring 20,000 workers to San Jose in the next decade. In August of this year, Adobe Systems also proposed a development — called North Tower — that could bring thousands of its workers to 333. W. Fernando St., a short drive from Foundry Commons.
According to a Kidder Mathews Bay Area Multifamily Market Overview released at the end of the third quarter of 2018, sales activity for multifamily assets increased during the third quarter, as 15 transactions were reported for a total sales volume of $891.9 million. The report states that although the Federal Reserve likely plans to raise interest rates by the end of 2018, investment outlook in San Jose and the greater San Francisco Bay Area remains positive.