SAN JOSE — Renovations are expected for a downtown San Jose apartment complex acquired in a recent deal that its buyer suggests could be more attractive for those unable to afford their first home in the city.
Museum Park Apartments, a 117-unit residential hub at 465 West San Carlos St., was bought for $53.1 million, according to its new owners Oberndorf Real Estate Management and The Bascom Group.
The buyers believe the San Jose area offers significant upsides for apartment investors, as owning a house has become more expensive, making rentals appear more attractive by comparison.
“We see strong underlying fundamentals in this market, including high barriers to entry for new multifamily supply, robust demographics, and sustained job growth, that support our long-term investment in Museum Park,” said Peter Oberndorf, a managing director with Oberndorf Real Estate.
Consisting of 12 adjacent three-story buildings, wide-ranging upgrades and renovations are planned for the complex.
“Our plan is to upgrade unit interiors with targeted improvements and enhance the property’s exterior and community amenities, giving tenants a satisfying living experience at a competitively priced alternative to newer apartment communities,” said Paul Zakhary, a Bascom Group senior principal executive.
Obendorf Real Estate and Bascom Group hope the upswing in the region’s tech sector can support successful efforts in owning apartment properties.
“Museum Park’s Silicon Valley location makes the opportunity particularly compelling, as the region is one of the few markets in the country currently experiencing significant job and rent growth,” said Joe Ferguson, Bascom Group’s vice president of acquisitions.
Near the intersection with Gifford Avenue, Museum Park Apartments was acquired at 6.8% below the $57 million seller Lakevision Capital West paid in 2020.
The per-unit price of $453,800 is 17.9% above the $385,000 per-unit average price for completed South Bay apartment sales so far this year, as estimated by commercial real estate firm Marcus & Millichap.
Lakevision Capital recently sold another downtown San Jose apartment hub, a blue-hued tower at 1 South Market St., for $176 million, well above the average price for the region.