Folsom Street Apartments Bought by Stockbridge Capital

Stockbridge Capital Group plunked down nearly $65 million for an apartment complex in South of Market.

The San Francisco-based investment firm acquired the 115-unit 923 Folsom apartments for $64.3 million, or almost $560,000 per unit, the San Francisco Business Times reported. A J.P. Morgan Asset Management affiliate was the seller. J.P. Morgan bought the property at 923 Folsom Street as an entitled development site from Trumark Urban in 2015 for $20 million.

The per-unit price marks an increase from figures previously paid by investors in the early innings of San Francisco’s post-pandemic multifamily market recovery. As the market heats back up, more investors are moving in on properties.

Rents are on the rise across the city, in part due to the influx of artificial intelligence companies and their growing numbers of employees moving into town. The heightened demand and diminished supply as new apartment projects come to a halt have contributed to the rent increase in recent years, according to the Business Times.

In January, median monthly rent for a one-bedroom apartment was up 16.1 percent year-over-year to $3,670, per Zumper data cited by the Business Times. In the same period, median rents for two-bedroom units were up 19.1 percent to $5,010.

Rising nine stories above Folsom Street, 923 Folsom consists of a mix of junior one-bedroom, one-bedroom and two-bedroom units. The building was 97 percent occupied as of last September, per the Business Times.

In October 2022, a J.P. Morgan affiliate secured a $25.5 million loan backed by 923 Folsom with maturity slated for November 2029. The residential property was appraised at $69.1 million that year. It is not clear if Stockbridge assumed that debt as part of its acquisition of the building.

Elsewhere in Greater San Francisco, Stockbridge is one of three firms working to redevelop Treasure Island off the San Francisco-Oakland Bay Bridge. Last month, the joint venture, dubbed Treasure Island Community Development, submitted a revised application to add between 1,400 and 2,800 homes to the already-planned 8,000 units slated for the island from Treasure Island Community Development, the San Francisco Chronicle reported.

— Chris Malone Méndez