The sale of a new, high-end apartment project in North San Jose is setting the curve for Class A properties in that area during the current real estate up cycle, pricing out at about $498,000 per unit.
Zurich Alternative Asset Management paid about $86.7 million for the 174 unit, amenity-laden community at 121 Tasman Drive, according to two sources with knowledge of the deal. The seller was a limited liability company affiliated with the insurance giant Cigna and Oakland-based developer LCOR, according to title records.
The property, adjacent to the VTA Baypointe light-rail station, was completed in 2013 and was already 95 percent leased as of this past April. It comes as the North San Jose area has experienced rapid change in the last couple of years, moving from essentially a massive, low-density office park to an emerging community of relatively dense mid-rise residential and new office parks.
The transformation has been led by the Irvine Co., which has built several large communities in the neighborhood. The property at 121 Tasman is located near Irvine’s Crescent Village, River Oaks and North Park communities, and is also down the street from where Samsung Semiconductor is currently constructing a 680,000-square-foot campus at North First Street and Tasman Drive.
Investors in the area have also sunk big bucks into rehabilitating older R&D properties for modern tech tenants, such as TMG’s Champion Station, which includes several buildings formerly owned by Cisco.
The sale of the property by 121 Tasman Apartments LLC was arranged on the seller’s side by Stanford Jones, Philip Saglimbeni and Salvatore Saglimbeni, all of Institutional Property Advisors, a unit of Marcus & Millichap. Zurich was represented by Sean Bannon and Chris Edgar.
“Tasman is the first of the new vintage assets in the Golden Triangle to trade,” Philip Saglimbeni said in a statement to the Business Journal. “The majority of the developers with projects either underway, in lease-up or recently stabilized are long-term holders, which will likely translate to very limited near-term opportunities to acquire core Class A assets in the Bay Area. We had very strong interest in the deal from both institutional and sophisticated private parties.”
Driving investor interest in apartments is strong job and rent growth, which has only accelerated. As I wrote last week, average apartment rents in Santa Clara County jumped $124 in the second quarter, which is a year-over-year increase of 9 percent.
The 121 Tasman property includes bells and whistles like a spin room, video-conference center, outdoor fireplace lounge, dog park and demonstration kitchen.
Zurich Alternative Asset Management is an alternative investment advisor to Zurich North America, the huge insurance company. ZAAM currently manages about $2.5 billion in commercial real estate assets in the U.S. for its affiliates.