Despite the COVID-19 rental and eviction restrictions on Marin County landlords last year, the market rebounded after the second quarter and closed out 2020 with a strong showing of over $426 million in apartment transactions.
Even with softening Marin County rents, demand for well-located Marin County apartment properties remained, with institutional investors accounting for the purchase of 596 of the 792 units that changed ownership last year.
The largest transaction was the sale of 700 Larkspur Landing Circle, Larkspur, known as the Serenity Apartments, for $222.5 million. The 342-luxury apartment project, located across from the Larkspur Ferry Landing, consisted of a mix of one and two bedroom units built in 1978 and recently renovated.
The buyer was the California Community Housing Agency, and the seller was a German investment firm that purchased the property in 2014 for $175 million.
Smaller complexes, with five to 22 units, accounted for most apartment transactions last year. Southern Marin County prices per unit were $450,000–$938,000 for a 22-unit waterfront Belvedere property that closed for $20.645 million. Capitalization rates ranged from 2.8%–4.5%, depending on building amenities and rental upside.
In central and northern Marin, per-unit prices were $216,000–$426,000. Cap rates in San Rafael, San Anselmo and Fairfax apartment transactions ranged from 3%–5%, depending on location and rental upside at the property.
The continuing investor activity in 2020 has spilled over to 2021, with strong demand for five- to 10-unit properties in good locations. In February of this year, a nine-unit building in a popular San Rafael neighborhood was listed for $3.1 million and received eight offers. The winning all-cash offer just closed, at a price of $3.325 million.
With all-time-low interest rates and a high demand for rental housing, I expect Marin County will experience another strong year for apartment sales.
Katherine J. Higgins (katherine@khiggins.com, 415-302-7730) is an investment broker at Berkshire Hathaway Drysdale Properties in San Rafael and has represented Marin County apartment buyers and sellers since 1986.