Bridge Capital, Friedkin Buy Sunset Towers Apartments

AvalonBay Communities has completed its sale of the Sunset Towers apartments in the Inner Sunset.

The Virginia-based firm sold the 243-unit property to Bridge Capital Partners and Friedkin Property Group for $105 million, the San Francisco Business Times reported, citing sources familiar with the deal.

AvalonBay fielded higher offers from other firms for the property, which is three blocks south of Golden Gate Park, according to the Business Times. The deal for the six-decade-old development works out to about $432,000 per unit, meaning Bridge and Friedkin were willing to pay a relatively high price for an aging property. The Sunset Towers were built in 1961 and renovated in the mid-1990s. Because older high-rises often require more work than newer properties for owners to bring them up to code, Sunset Towers will likely need to undergo building-wide upgrades, though the cost for such modernization remains unclear, according to the Business Times.

The timing of the sale coincides with an apparent comeback in the San Francisco rental market. Rents are increasing with year-over-year growth at about 13 percent, per Apartment List data cited by the Business Times. In September, rents in San Francisco surpassed pre-pandemic highs — a culmination of a nearly two-year-long upswing that began in mid-2024 after reaching a post-pandemic bottom. The rent surge, reaching a monthly median of $3,520 for a one-bedroom and $5,000 for a two-bedroom in September, has been attributed to limited new apartment supply and rising demand as more tech and artificial intelligence firms set up shop or expand their presence in the city.

Meanwhile, multifamily investment volume is up more than 35 percent year-over-year, per Avison Young data cited by the Business Times. Investors have been focusing on existing properties in supply-constrained neighborhoods such as the Inner Sunset as few new market-rate projects emerge and many are paused as construction costs mount. More than 20,000 units in San Francisco are waiting to be built as projects face years of delays or fall apart entirely. Last year, only 1,453 residential units were completed and plans were filed for 2,541 new homes, down from more than 5,000 delivered in 2020, according to the San Francisco Planning Department.

— Chris Malone Méndez