Multifamily Commands Highest Ever Price Per Unit in Region

SACRAMENTO—The Sacramento Valley has led the nation in rent growth among the top 50 markets tracked by Axiometrics for 18 straight months and is ranked among the top US markets for projected rent growth during the next two years. As of July 2017, Sacramento's year-over-year rent growth is 9.8% with an occupancy rate of 96.9%, according to Yardi Research.

With those types of rent stats, it is no surprise that a recent sale of EVIVA Midtown for $53 million commanded record per-unit pricing in the acquisition by Walnut Creek-based Sequoia Equities. At nearly $450,000 per unit, the property recorded the highest price per unit ever for a multifamily sale in the region, eclipsing the prior record by 45%.

The project's developer and seller was The Integral Group LLC, a national real estate development and investment firm headquartered in Atlanta. Marc Ross of CBRE's Sacramento office represented Integral and its investor partner, LDK Ventures.

“With its irreplaceable location and high-end construction and design, EVIVA Midtown is well positioned to be a signature property within the urban core of Sacramento for many years to come,” said Ross. “As the first new construction sale of this market cycle, we expect this highly successful project will pave the way for more development.”

This six-story 118-unit trophy apartment community is located in the urban core less than a mile from the CBD. Located at 1531 N St., the asset is located along the 16th Street corridor, where downtown and Midtown intersect. With the highest Walk and Bike scores of any community in the region, EVIVA Midtown is within a half-mile walk of 18 coffee shops and approximately 150 restaurants and bars.

“This is a signature sale in the hottest apartment market in the country at the center of the $2 billion urban renaissance afoot in Sacramento, with the new Kings arena, Kaiser hospital, MLS stadium, etc.,” Ross tells GlobeSt.com. “Sacramento continues to generate significant rent growth while most of the rest of the nation is slowing down or even falling backwards, i.e., the Bay Area now has concessions creeping back in.”

Ross tells GlobeSt.com that the city recognized the need for new multifamily construction and took aggressive steps to have the project constructed. Capital Area Development Authority offered a 10-year $300,000 abatement to get the deal underway.

Built in 2016, EVIVA Midtown is one of only 10 100-plus unit market-rate multifamily assets in the CBD, but the only one that features highly efficient Certified Cal Green modular construction. The property offers gourmet kitchens with stainless steel appliances, in-unit washer and dryer, and oversized windows with views of downtown and Capitol Park.

“This is the first modular built property in Sacramento and one of only a few in the entire state as this type of construction is not common anywhere,” Ross tells GlobeSt.com. “The units were constructed by Guerden in a Boise, ID factory, shipped to Sacramento and stacked into place. Modular provides many unique advantages including a shorter construction schedule. The units can be built at the off-site factory while the site and foundation work are competed concurrently. Due to the factory prefabrication process, the units are protected from the elements during construction and in turn are delivered in prime condition.”

The amenity package includes a fitness center, community lounge and entertaining kitchen, courtyard with fire pit, barbecue and enclosed parking garage with controlled access. Additionally, the residential units are complemented by approximately 5,639 square feet of street-level retail on the ground floor including a Jimmy John's sandwich shop scheduled to open in October.

“This is a highly visible and a very meaningful sale that will no doubt open the floodgates, providing lenders, JV equity and developers with proof that exit pricing now supports new development,” Ross tells GlobeSt.com.