SUNNYVALE — Citra, a multifamily residential hub in Sunnyvale, has landed a buyer in a deal that produced a relatively unusual event in a rocky regional market: the property was bought for more than its assessed value.
Purchased for $68.5 million, according to documents filed on July 25 with the Santa Clara County Recorder’s Office, the transaction offered a sharp contrast to the slumping values, loan failures, feeble rents and foreclosures that have haunted the Bay Area’s office, hotel and apartment markets.
The price for the 147-unit apartment hub at 745 South Bernardo Ave. was 10.1% above the $62.2 million value it had based on the latest estimate posted by the Santa Clara County Assessor’s Office.
Prime Residential, a unit of investment firm Prime Finance, acted through an affiliate to buy Citra from Pacific Urban Residential, state and county public documents show.
The Bay Area apartment market has been weak in some East Bay cities such as Oakland, where loan defaults and foreclosures have surfaced.
In the South Bay, a high-profile foreclosure and purchase of a double-tower apartment complex with more than 600 units recently occurred in downtown San Jose.
Demand to rent apartments could be on the rise in the South Bay, according to a second-quarter apartment market report produced by Marcus & Millichap, a commercial real estate firm.
“Rising home prices, up 10% in 2024, may drive more demand for apartments from priced-out buyers,” Marcus & Millichap wrote in its report.
The vacancy level for apartment units was 4% in the South Bay in March, the report determined.
Apartment vacancy levels, however, are poised to hop higher as a host of multifamily residential projects are scheduled to sprout in the South Bay, the report stated.
“A historic year of apartment deliveries” is due to materialize in 2025, Marcus & Millichap predicted. “Many projects launched in 2022 will reach completion” this year, the real estate firm added.
Even with the burst of new construction, the Marcus & Millichap report predicts that average rents in the South Bay will rise 2.6% in 2025.
“Rent growth will remain intact, supported by steady net absorption and limited supply in some submarkets,” Marcus & Millichap stated in the second-quarter report. “Rent is expected to reach $3,214 per month — the highest among all major U.S. markets.”