A Walnut Creek-based investor has acquired an apartment complex in the East Bay suburb of Pleasant Hill with plans to maintain its 71 units as affordable on rents, based on local income levels.
Novin Development Corporation bought the Post Apartments at 1460 Contra Costa Blvd. from PTLA Real Estate for $23.15 million, which comes to $326,000 per unit.
The property was built in 1960 and offers a mix of one, two and three-bedroom units. Amenities include a community pool and laundry room and off-street parking. Monthly rents are between $1,895 – $2,195, according to apartments.com.
Novin has given the City of Pleasant Hill a commitment to preserving the apartments as affordable rents. In the last two years, rents have risen tandem with the prices of single-family homes, which saw an average hike of more than 40 percent in Pleasant Hill. Novin aims to keep rates at the Post to a maximum of what is deemed affordable for household with up to 80 percent of the city‘s average income. Pleasant Hill currently has an average income of $118,947 and 80 percent below that would be $89,477.
“We are losing naturally occurring affordable homes at a pace faster than we can build new units due to speculative value-add investment strategies that lead to gentrification and unsustainable rent increases,” Iman Novin, President at Novin Development, said.
The price of Post Apartments is generally in line with other recent residential deals in the East Bay. The 208-unit Austin Commons complex in Hayward closed for $345,000 per unit in February. Larger markets have lagged smaller cities in the East Bay; for example, La Peralta Apartments in downtown Oakland sold for $200 per-unit. One explanation could be larger cities having stricter rent-control laws that limit rent increases landlords are able to impose.
Overall, the East Bay’s residential market has ridden high on its relative affordability and a centralized location. Rents have kept up with nationwide upward trends amid the pandemic, while both San Francisco and San Jose have lagged behind. The average monthly rent in the East Bay rose to $2,662 per-unit in the second quarter, which is an increase of eight percent from a year earlier.
The rise in rents has not led to more vacancies. The East Bay saw a vacancy rate of 2.5 in the second quarter, compared to 4.1 percent the same time last year, according to a report by Marcus and Milichap.