AvalonBay Listing Tests SF Multifamily Investor Appetite

AvalonBay Communities is offloading a 243-unit apartment building near Golden Gate Park.

The Virginia-based company listed its Sunset Towers development for sale and has received bids of more than $100 million for the complex, the San Francisco Business Times reported. A sale at that price would be $411,000 per unit. The property at 6-8 Locksley Avenue is under contract though a deal has yet to close.

The potential deal is a sign that multifamily investors are ready to bet on San Francisco again amid an increase in rents and artificial intelligence jobs in the city.

A 332-square-foot studio apartment at Sunset Towers is advertised at $3,320, which is $10 per square foot. A one-bedroom is listed for $6.60 per square foot. The average rent price in San Francisco is just under $4.50 per square foot, according to Apartments.com.

Rents for Class A apartments in San Francisco are up 8.8 percent year-over-year, according to CBRE. Class B and C properties, meanwhile, have seen a growth of about 5.5 percent. Demand is reportedly being driven by tech workers, especially those in AI and related fields.

The data appears to support the idea of an AI-linked bounceback. For nearly two years, between mid-2022 and 2024, San Francisco had no sales of 100-plus-unit apartment developments, as investors weren’t convinced the city was humming back to life.

AvalonBay has believed for months that the AI boom is behind rising apartment rents across the city. Housing demand has increased amid return-to-office mandates, improved public safety and AI-dominated job growth, according to AvalonBay COO Sean Breslin.

“AI is certainly a big part of that,” Breslin told investors in May of the upward pricing trend, the San Francisco Business Times reported.

AvalonBay president and CEO Benjamin Schall told investors last month that sales across its portfolio could increase as rents and property values pick up.

Investors will likely be drawn to existing multifamily properties instead of sinking money into new construction. More than 20,000 apartment units in San Francisco are in limbo as projects face years of delays or dissolve entirely. Last year, just 1,453 housing units were completed and plans were filed for 2,541 new homes, down from more than 5,000 delivered in 2020.

AvalonBay owns nearly 3,400 apartments in San Francisco with a value of about $1.2 billion.

— Chris Malone Méndez