Apartment Building Sells for $337 Per SF

BERKELEY, CA-Seligman Western Enterprises Ltd. has sold a 60-unit apartment building located next to the University of California Berkeley for $12 million. Called the Pioneer, the five-story building was constructed in 2002 and has three ground-floor retail spaces. Approximately 10% of the apartment units were vacant at the time of sale.The buyer is SPI Holdings, a San Francisco-based private investment entity controlled by Dennis Wong. The purchase price equates to $199,979 per unit, $337 per sf, a 6% capitalization rate and 10.9 gross rent multiplier. Arroyo & Coates handled both sides of the transaction. “You are not going to find many, if any, apartment buildings that have sold for over $300 per sf,” broker Mark Leary of Arroyo & Coates tells GlobeSt.com. “There have only been four new apartment buildings built in Berkeley in the past 10 years.”Seligman developed the complex with a partner and then bought out the partner prior to the sale. Seligman is reportedly trading into a shopping center. The average size of the units is 550 sf and all of the units are occupied by university students, says Leary. Typically, because the $2.96 per sf rental rate, two students will occupy a studio and four will occupy a two-bedroom unit. Leary says the complex is required to rent approximately 10% of the units to people of below median income, but it’s not a hard requirement to meet considering most students don’t make much money.