Marin County apartment sales increased 26% in 2022

Of multifamily property sales last year, institutional sales of large apartment complexes took the lead in Marin County.

Over $577 million in apartment properties sold, totaling 1,186 units. That dollar volume was up over 26% from 2021.

The largest sale was the 455-unit Skylark Apartments complex in the hills above the town of Larkspur. It consisting of 18 separate buildings on a 25-acre site. The property sold for $300 million in February 2022, at a premium price of $659,000 per unit.

By comparison, the average per-unit sale price for Marin County apartment buildings is $371,000.

Pell Development in San Rafael was the seller, and The Prime Group out of San Francisco was the equity fund purchaser.

A second large sale was the 126-unit Lofts at Albert Park in downtown San Rafael. It is an amenity-rich newer development with modern interiors and an abundance of outdoor patios and gathering areas.

The price was $58.6 million and was sold by Bel Albert Holdings, based in Boston. The buyers, Sack Properties, are San Francisco investors. Built in 2001, the project sold at a 4% capitalization rate and the equivalent of $465,000 per unit.

The remainder of Marin County apartment sales were between five and 98 units, with most closings in the five- to 20-unit range. These smaller properties make up the majority of apartment inventory in Marin County and are most often managed by the owners and their families.

Cap rates are a metric for figuring return on investment for commercial properties. At time of sale, the overall cap rates for deals in both 2021 and 2022 were almost identical at 4.29%.

The brisk pace of Marin County apartment building sales should slow in 2023 due to rising interest rates. In addition, the softening rental market will keep many investors on the sidelines until there is a more positive uptick in the economic outlook that has been dominated by continuing inflation news.

Katherine Higgins is a broker associate for investments and multifamily at Berkshire Hathaway/Drysdale Properties Commercial Property Group in San Rafael.