San Jose apartment complex sells for $110m

Walnut Creek, Calif.–based real estate firm Tilden Properties and Seattle-based Bonney Watson have purchased Foundry Commons, a 238-unit apartment complex located in San Jose for $110.3 million, according to local media outlets.

Led by numerous tech and professional firms, unemployment has fallen substantially in the San Jose metro and is driving significant housing demand, according to Marcus & Millichap. The high cost of single-family homes, coupled with a shortage of available apartments, triggered the largest number of multifamily completions in two decades in 2016. Although vacancy ticked up moderately last year, the pipeline will thin substantially this year, allowing vacancy to stabilize as recently built units are filled. While this process involved some rent discounting during lease-up as construction peaked, continued growth in high-paying skill positions will create sufficient demand to improve NOIs as rents reaccelerate. This past year, rent control gained some traction in the metro. In San Jose, a 5 percent limit on annual rent hikes with allowances passed, along with annual rent increases limited to between 2 and 5 percent in Mountain View.