Mid-Priced Apartment Community Trades Hands for $145M
In an area where skyrocketing rent is squeezing the middle class out of existence, a mid-priced apartment community is an oasis. One of these rare gems recently changed hands, sold by investment Goliath Blackstone to Nuveen, an investment arm of TIAA-CREF (Teachers Insurance and Annuity Association of America-College Retirement Equities Fund).
The whopping $145.2 million price tag translates to $400,000/unit for the 348-unit property currently known as Terra House. Rent at this property, located at 4501 Snell Ave in South San Jose, averages $2,500/month, which is below average for San Jose. Average rents nationally are $1,355/mo, but average rents in San Jose top $2,770, according to CoStar.
Terra House was built in 1991, and was last renovated in 2009. The property includes mixed units from studios to 3-bedrooms, which include walk-in closets, washer/dryer hookups, and air-conditioning. Shared property amenities include a pool, fitness center, and grilling stations.
The property could be considered a candidate for a fresh renovation, which would likely boost rents up to at least the San Jose average. The Terra House deal represents one of the few recent sales of a more moderately priced community. Much focus has been placed recently on the 22,000 newer, higher-priced complexes that have been developed in San Jose since 2012, which are priced and outfitted to appeal to high-salaried tech employees.
The Silicon Valley tech expansion has been largely blamed for the astronomical rise in housing costs, caused by a shortage of housing in the face of high demand. Vacancy rates in San Jose, hovering around 5.2%, is well below the national average of 6%. Analysts at CoStar believe that this rate may actually be somewhat inflated, due to the continuous addition of new capacity as projects are completed. These units are quickly gobbled up.
Let my team at Keystone Realtors® meet all your real estate needs. We can help you find the perfect investment property to get started, and provide advice on your investing journey. Paul Phangureh has over 16 years of experience in buying and selling in the Santa Clara and San Mateo County areas, specializing in the high-end, luxury market, as well as commercial and multi-use real estate. We can help you navigate the process of getting started with real estate investment. Visit our website at Keystonesv.com for listings and information. You can contact Paul at 650-924-2544, or email at email@example.com.