Job Growth and Low Housing Inventory Jolt Demand
Unemployment in the Sacramento region has fallen to below 4%, led in part by private sector growth in healthcare and technology, as year-over-year rental growth is expected in the high-single digits in 2018.
SACRAMENTO—A primary driver for multifamily investment, especially on the part of Ridge Capital Investors, is the healthy Sacramento housing dynamic, which has positioned the region as a top-tier rental growth market during the last five years. Much of this performance is a result of strong job growth fundamentals coupled with very low delivery of new housing inventory during this cycle.
According to commercial real estate research firm, Yardi Matrix, year-over-year rental growth in 2017 exceeded 7% and the immediate neighborhoods are expected to achieve high single-digit rent growth in 2018 as well. Unemployment in the region has fallen to below 4%, led in part by private sector growth in healthcare and technology.
As a result of this economic strength, Ridge and Contrarian Capital Management LLC acquired two suburban apartment communities totaling 268 units in separate transactions with JCM Partners totaling $39.5 million. La Riviera Commons, located at 8719 Woodman Way, and Antelope Woods located at 6413 Tupelo Dr., are both class-B apartment communities built in 1975 and 1986 respectively.
The ownership group will execute a significant renovation program across the two-property portfolio that will consist of substantial improvements to unit interiors and exteriors, as well as upgrades to property amenities, branding and signage. Upon completion, the properties will compete directly with comparable class-B-plus and A-minus properties. Ridge has engaged FPI Management Inc. to provide third-party management services for both communities.
This is Ridge and Contrarian’s sixth and seventh joint venture investment together. These investments are the fifth and sixth apartment acquisitions by Ridge in the Sacramento region since 2014, representing an investment of nearly $100 million. Ridge has acquired more than $700 million of office and apartment properties in Northern California since 2012.
Globest.com learns that Ridge is attracted to the long-term demographic and employment growth fundamentals of the Sacramento MSA and has plans to be an active owner in the area.
Marc Ross of CBRE represented the seller on La Riviera Commons. Steve Nelson, Dusty Haeling, Phil Saglimbeni, Sal Saglimbeni and Ken Blomsterberg of Marcus & Millichap/IPA represented the seller on Antelope Woods.
For more information on multifamily news, join us at RealShare Apartments in Los Angeles from October 29-30, 2018. RealShare Apartments brings together the industry’s top owners, investors, developers, brokers and financiers as they gather for THE MULTIFAMILY EVENT OF THE YEAR! This conference leverages the strength of ALM’s Real Estate Forum and GlobeSt.com which report on the multifamily sector daily. Register for RealShare Apartments.