A North Carolina investor has bought a 260-unit apartment complex in South San Francisco for $206 million.
Bell Partners, a multifamily asset management firm based in Greensboro, bought the two-building complex at 400 Cypress Ave. after competitive bidding, the San Francisco Business Times reported. The cost came out to $793,000 per unit.
The seller was San Mateo developer Sares Regis Group of Northern California, which built the seven-story Cadence Apartments in 2019.
The complex of one-, two- and three-bedroom units is a short walk from the city’s new Caltrain station and less than two miles away from Oyster Point and the headquarters of Genentech.
Occupancy rates at Cadence, to be renamed Bell South City, hover between 90 percent and 95 percent, said Drew Hudacek, chief investment officer of development properties for Sares Regis.
“Biotech is one of the few industries where people have still been going into work-––so that did very well for Cadence,” Hudacek told the newspaper.
Bell, which has rental properties in the North and East Bay, saw a unique opportunity in Cadence, said Nickolay Bochilo, executive VP of investments. The modern apartment complex sits within five or 10 miles of a biotech cluster of about 200 South San Francisco companies.
But despite a booming local economy and tens of thousands of workers drawn to the life sciences hub over the next decade, its housing stock is mostly single-family homes, he said.
Brett Betzler, a senior managing director with brokerage firm Berkadia Institutional Solutions, represented Sares Regis and its capital partner AFL-CIO Building Trust Investment in the sale.
He said the pool of housing options available to workers at Oyster Point and beyond is likely to remain largely stagnant for the next few years, with projects in the South San Francisco area beyond were put on pause during the pandemic.
The disruption could prove a long-term obstacle given the rising construction costs and interest rates. He believes it could be as long as three-and-a-half years before renters see significant new residential supply come online in the Bay Area.
“There have been no groundbreakings of new developments in two years,” Betzler said. “It’s not like a light switch, where you flip it back on and go break ground.”
A second phase of Sares Regis’ Cadence project, a 195-unit apartment building at 401 Cypress Ave., is under construction, Hudacek said, but may not be finished for two more years.
Early this year, the South San Francisco City Council approved a ballot measure for November that would allow the city to develop, build or buy housing units, to make them more affordable to workers.
[San Francisco Business Times] – Dana Bartholomew
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