LARGE MULTIFAMILY IN BAY AREA – 2/25
That could be the motto for developers of just-completed apartment complexes in Silicon Valley, which have been selling just as the paint’s drying.
Case in point: Illara, a 200-unit complex in Milpitas’s booming transit district that opened earlier this year. It just sold to JB Matteson for $102 million, or $510,000 per unit. That may be a record per-unit price in the Santa Clara County city, which has seen a flurry of new for-rent and for-sale projects come online near the site of a future BART station by the Great Mall. The seller was a joint venture of Resmark Apartment Living and Shea Properties.
“The proximity to numerous large Silicon Valley employment centers make this a compelling location,” John Bellack, co-president and chief investment officer at San Mateo-based JB Matteson Inc., said in a statement. “We liked the walking access to the Great Mall and public transportation, including the VTA light rail and the new BART station under construction.”
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The deal comes the same week I reported Lennar’s apartment division had sold the just-completed Mountain View complex Tera to Mapletree Group for $738,000 per unit, or $110 million.
Stanford Jones, Philip Saglimbeni and Salvatore Saglimbeni of IPA Institutional Property Advisors, a Marcus & Millichap company, represented the seller. Dennis Williams of NorthMarq Capital arranged the financing.
Newer-vintage apartment communities fits in with JB Matteson’s strategy. The 50-year old privately held investment manager specializes in complexes built after 2000 in West Coast cities, including Seattle, San Rafael, Petaluma, Tustin and Ventura.
The buyers are betting that there’s still plenty of room left for rents to grow even after several years of increases.
Whether that happens or not is an open question, but recent rent trends have not shown much letup. In the third quarter, the average rent for a one-bedroom apartment in Santa Clara County reached $2,381, Real Answers said. That’s up $45 from the previous quarter, and 11.5 percent from last year. Fourth-quarter numbers will be out next month.
This part of Milpitas may be poised for continued strength. It’s not far from the North San Jose jobs district, which is seeing a lot of activity these days from the likes of Apple, Google, Broadcom and others.
BART initiation next year will provide a good link to East Bay jobs centers and eventually downtown San Jose (though funding for that final leg of BART is not yet secure).
To bring in new development and help feed the future BART station, Milpitas years ago approved a new Transit Area Specific Plan that changed the area’s industrial zoning to allow moderately dense residential. Thousands of units are now in the pipeline, with developers like SummerHill, Pulte, Lyon and others snapping up sites.
Ilara is in keeping with the trend for uber-upscale apartment living, featuring a fancy fitness center, cyber cafe, private “work pods,” and game room. There’s also vacation-level resort amenities and a dog park.
A one-bedroom, 711-square-foot apartment at Ilara was going for $2,640 this week, according to a Craigslist listing that highlighted “sleek cabinetry, designer lighting and plenty of parking.”
I first wrote about the project back when Shea and Resmark bought the land in September of 2012.
This is the most significant Milpitas multifamily trade since Essex Property Trust bought Lyon’s Apex community about 18 months ago — also brand new — for $410,000 per unit.
While the latest deal blows that one out of the water, it looks a lot less expensive when you compare it to some other recent trades — including the $828,000 per unit sale of the 1970s-era Sharon Green Apartments last week.