USAA to Sell 330-Unit Alchemy Apartment Asset in San Francisco

USAA Real Estate, Alchemy, San Francisco, Wood Partners, CBRE

By Jon Peterson

San Antonio-based USAA Real Estate has chosen to place on the market for sale the 330-unit Alchemy apartment complex in San Francisco located at 200 Buchanan Street, according to sources familiar with the property. There was no pricing guidance available on the sale at this time.

The seller of the complex has awarded the listing to CBRE. The firm’s offices in San Francisco and Seattle will be involved in the transaction. CBRE declined to comment when contacted for this story. The sale of the property will represent one of the largest apartment assets offered up for sale in San Francisco in some time, according to industry sources.

USAA Real Estate stated in an email that it has no comment for this story at this time. The real estate investment firm first developed the property in 2016 in a relationship with Atlanta, Ga.-based Wood Partners. The property was developed for $117 million, according to published reports on the asset.

The complex has a mixture of both market rate and affordable units in the asset. The breakdown between the two is 84.8 percent of the property, or 280 units, are market-rate apartments, and the remaining 50 apartments, which represent 15.2 percent of the property, are affordable. There are five different market-rate units in the building. These are seven studios, 182 one bedroom/one bath units, 55 two bedroom/two bath units, 33 two bedroom/2.5 bath units and 3 three bedroom/three bath apartments. The average size of all of the market rate units is 916 square feet. The affordable units include three studios, 32 one bedroom/one bath units and 15 two bedroom/two bath apartments. The average size of these apartments is 843 square feet.

Alchemy is now 96 percent occupied. It was developed as a mid-rise building that is seven stories high. The total size of the parcel amounts to 5.78 acres of land or 251,873 square feet. The property attracts a dynamic rental base that includes both millennials and Gen-Z tenants. Some of the shared amenities of the project include a resident lounge with a coffee bar that provides ample room for work-from-home space, a full-size bocce ball court, a state-of-the-art fitness center and expansive outdoor courtyards.

The apartment complex has a strong location. It is a three-minute walk to the Muni Metro Line, which can take residents to downtown San Francisco in 15 minutes. Many other major retail destinations and lifestyle amenities are not that far away either.

Not many multifamily properties have been traded in San Francisco in the recent past. One property that could provide some guidance on the pricing is 625 Scott Street, which sold in August of 2022. This 42-unit asset traded for $18,050,000, less than the $20 million the sellers were going in at the time the marketing of the building started. That pricing came to $429,761 per unit, although this asset is nearly 100 years old.

A recent, third quarter of 2022 Multifamily Market Report for the San Francisco Metro Area by Marcus & Millichap has seen increased employment over the first half of the year, more than 34,000 jobs, help in the recovery of the multifamily sector. In addition, with the median home price around 13 times greater than the metro’s median income, which is more than double the U.S. ratio, Marcus & Millichap sees continued demand for higher-class apartments, including in and around the urban core.

The region’s notoriously supply-constrained market will only see around 1,900 units delivered to the market, which will continue to put pressure on the vacancy rate, which is set to hit 6.6 percent this year, or just 60 basis points above the March 2020 rate.

West Coast Commercial Real Estate News