Slated to be completed in December, the 25-unit building under construction at 528 Thomas L. Berkley Way, adjacent to the Great Western Power Company gym in Oakland’s Uptown District, is now on the market for $17 million.
That’s $680,000 per unit or roughly $792 per square foot at asking.
And according to the offering memorandum for the building which is now making the rounds, the rents for the project are being projected at $4 per square foot, or $3,400 a month for an 860-square-foot unit with a bedroom and den (not including another $100 per month for parking in one of the development’s 22 parking spaces).
As we reported earlier this year, while rents in San Francisco have slipped, East Bay rents have climbed, a trend which shouldn’t have caught any plugged-in readers by surprise.
ARE THEY SERIOUS ABOUT THAT PRICE?
No. They are not serious.
I won’t be surprised when this: doesn’t sell / has price lowered / rents at a lower PPSF
It’s cheap to list your project at a crazy price and hope to catch some Mainland China Money Lightning In A Bottle. What’s your downside, after all?
There is zero downside. Damn thing isn’t event finished yet! I guess they are hoping for the little remaining dumb money to stumble upon this.
If the cap rate equals (net operating income) divided by (acquisition cost), and operating costs are 50% of rents, then the cap rate = ($4 psf rent)*(0.50 NOI/rent)*(12 months)/($792 psf asking acquisition price) = 3.3%.
Is that favorable? That less than a 2% premium over risk-free 10-year Treasury bonds.
Is 50% operating cost reasonable? I know nothing about maintaining big buildings but it seems high, esp for a new low-rise
Oakland is SF’s Brooklyn.
It’s not. Brooklyn is Brooklyn. Oakland is Oakland.*
*Former New Yorker living in Oakland.
Actually Robert is correct. Speaking with current and former NYC folks, hip parts of Brooklyn are more like the Mission and maybe the good parts of Oakland (whatever that means.)
Oakland is SF’s Bronx.
Oakland is SF’s New Jersey, let’s be honest
SF is Manhattan’s New Jersey, if we’re honest.
That comparison is about 7 years too old and tired to be trotted out any more. Besides being (politely expressed) a misapprehension of fact, history, and nuance about both Oakland and Brooklyn, it carries the implication that SF is somehow Manhattan. And that’s just laughable.
yup, SF is at best a mini-me Manhattanization, though the east bay is SF’s jersey, oily refineries and gateway to the badlands and all.
If we’re comparing to NYC…SF is kind of like brooklyn and queens (mostly the mid to lower density parts), with a mini lower Manhattan mixed into the downtown. Oakland is kind of the same, but mostly just the lowest density parts, minus the Manhattan part entirely, mixed with Jersey city or Newark.
We’re just talking very rough analogies.
I’d say Oakland is more akin to the Bronx.
Oh I see: b/c they both host MLB teams…and Brooklyn doesn’t.
In what other way is Oakland “more akin to the Bronx” ??
Oakland would be Brooklyn if it had public transportation to San Francisco 24 hours a day, or a bridge to San Francisco that could be walked/biked.
Oakland will never be Brooklyn as long as it’s an independent city, since it serves as a convenient way for SF to sanitize itself by exporting its problems – not that it would do that, of course !! …Kings County rolls up in the same crime/poverty/what not totals as New York County: New York City.
Why is the whole building on the market? Isn’t the MO of a developer to build something and then sell/rent the units themselves?
(And as an addendum for those unfamiliar with the Continental side of the Bay, it should be pointed out this is also across from Uber HQEast: a good right-flelder’s throw…literally)
The building is for sale because rents in the east bay have started to decline (and relatively rapidly). Oakland may not have seen it yet, but rents in Berkeley are down 10% from last year and leasing activity has come to a complete stand still.
I have a 1BR rental condo in the East Bay, large complex. Identical units were listed for $2,000-$2,300/mo last summer, this month one was listed at $1,800/mo.
SF has similar downward trend re rents on new complexes, except these large complexes can hide their reductions in rent by offering other incentives, free month(s) rent, reduced parking rates, etc. Other smaller owners asking for sky high rents will see their units sit longer.
This is described as a one bedroom with a den. So more than just a one bedroom – that they don’t call it a two bedroom makes me think the den is an open foyer adjacent to the living/eating area.
probably an area without a window or closet that could be closed off to make a room.
“Alcove” might seem like a better term
I’m betting the developer wants to start another project and needs the capital they can easily get selling this property now.
Let’s see… The Higby, Addison Arts, The Varsity, The Overture, The Aquatic I, Garden Village Apartments.
Coming soon (under construction or near completion): Parker Place, The Dwight, The Aquatic II & III. I’m sure I’m missing some. Better living through more inventory.
EBGuy, what are those projects you have listed?
Those are all developments in Berkeley.
Forgot about the StoneFire at Miliva and University Ave. Eight stories using steel studs. Also, there’s lots of proposals for multiunit buildings along San Pablo Ave.
3400 sounds about 10% too rich to me. Unless they do the 1 month free rent BS that is de rigueur for new devs. Of course come year 2, if they don’t want all their tenants to bolt, they’ll offer something similar then too. Plus I’m sure oaklands rents are already softening, so this number may have to go down.
Dev is just looking/praying for dumb money to come along, as $800 PSF is prime condo pricing to individual owners.
As for rents in frisco, from my corner of the world I have seen a small 5% decrease in rents. This is for good quality common sense units in good locations, and not for fufu overpriced new devs with dog wash stations (I hate dogs btw), which of course are taking a bigger hit in their rents 🙂
Interesting observation about the slight drop in rents. A neighbor with a rented downstairs bedroom/bath held the rent at 1800/month after the current tenant left the area for greener pastures. He did not decrease the rent but did not increase it either. Held it at what’s its been rented for the past 2 years. its in the average but nice Mt. Davidson area – no fufu stuff here, but lots of dogs.
Dog wash stations, lol. So cheap for a developer to provide, so tempting to use in project marketing.
You seem to be referring to another Oakland project
“The Baxter on Broadway are located in the neighborhood of Oakland, CA. ”
So informative!
Like every single project these days. It’s a frigging shower pan with a sprayer! BFD!
Asking, and I am repeating, asking rents on the Peninsula are also dropping fast. Burlingame especially with a rent control initiative on the ballot in November.
If you price a couple hundred bucks over market rents your phone will not ring. Price the rent right and your phone will ring off the hook.
$3,400 a month rent for a one bedroom in Oakland. Yea right….
Not (just) a one bedroom, but a one bedroom with a (15 squarefoot) “den.”
take a look at advertised rents at the Uptown, just around the corner. Not that far from this. (and yes, I was surprised, myself!). About 2500 for a 1BR and 3500 for a 2BR.