By Meghan Hall
As the multifamily asset class continues to hold stable throughout the greater San Francisco Bay Area, investors are keeping an eye on investment opportunities coming to market, including a large housing development site in Vacaville. According to a leasing brochure obtained by The Registry, a 5.5-acre mixed-use development known as “East Main Street” has been posted for sale. The property, once developed, could accommodate up to 304 market-rate units.
The addresses for the properties are 701 Catherine Street, which totals 1.02 acres, 331 Wilson Street, which totals 1.37 acres, and 201 McClellan Street, the largest at 2.83 acres. Guidance pricing for the property, which is composed of several non-contiguous parcels, was not immediately available. The properties are owned by the Vacaville Redevelopment Agency, according to public documents. The City has owned the properties at least since 2011.
While the lots are mostly vacant, the City of Vacaville hopes they will be developed into a higher and better use, as the City created the East Main District Master Plan and Residential Urban High Density (RUHD) overlay that encompasses the parcels. The plans allow for development of up to 304 units.
However, the property is currently approved for an 83-unitmixed-use infill project as part of a current Disposition and Development Agreement. City officials unanimously approved the plan—submitted by Bay Area Urban Development and Ryder Homes—in September of 2018. Under these plans, the 331 Wilson property would accommodate a 14-unit, three-story, mixed-use building with 4,735 square feet of street level commercial, as well as three, two-story structures with 18 residential units. The Catherine Street parcel would consist of three, two-story residential structures with 20 units and associated parking, while the McClellan Street site would have two commercial and retail pads totaling 6,283 square feet along with seven, two-story residential structures that include 31 residential units.
The current plans also provide investors and developers with multiple exit strategies that will allow for either a for-rent or for-sale project, notes Cushman and Wakefield in its offering memorandum.
In the coming years, Vacaville is expected to continue to grow as the Bay Area’s populace expands. Multifamily fundamentals are also expected to remain steady. The site is less than a half-mile from Interstate 80, with proximity to major employers such as Genentech, Kaiser Permanente, Travis Air Force Base, UC Davis, NorthBay VacaValley Hospital and Anheuser-Busch. As a result, the East Main Street area is expected to benefit from a 15 percent increase in median household income by 2024, to an average of nearly $97,000 annually, biotech, logistics and food and beverage industries continue to grow.
During the same time period, the submarket is also expected to experience 20 percent rent growth by 2025. Since 2016, Vacaville has experienced 24 percent rent growth due to low unemployment and increased in-migration patterns. Estimations by Yardi predict that by 2029, rents could rise as much as 35 percent while maintaining 95 percent occupancy. These fundamentals will continue to be bolstered by the 4,000 new residents Vacaville is expected to add over the next few years, as well as the city’s limited development pipeline. Currently, there is just one market rate project under construction, and 216 total units in the pipeline. Just three market rate properties have been delivered in 2015.
“When completed, East Main Street will offer a rare, newly-constructed and highly amenitized living experience necessary in attracting the region’s most affluent residents,” stated Jason Parr of Cushman Wakefield.