If it seems like we’ve been talking about San Jose a lot lately, it’s because we have. There’s so much development happening throughout the city that it can be hard for San Jose property managers, investors and building owners to stay up to speed!
As latest evidence: North San Jose just ranked #3 in terms of U.S. neighborhoods to experience the most apartment development between 2010 and 2016. According to an analysis by RentCafe, at least 11 new buildings with 50+ units came online during this period, consisting of more than 6,800 new apartment units in total.
That’s right – at least 6,800 new apartment buildings in North San Jose. That doesn’t even account for apartment construction in smaller buildings (fewer than 50 units), and doesn’t include development that’s happening elsewhere in San Jose. We’re talking thousands of new units in a single San Jose neighborhood.
Consider Domain or Vista 99, two North San Jose apartment complexes completed during this time by developer Equity Residential. Domain is one of the largest modular-construction projects in the region; its 444 units were trucked in from Idaho before being assembled on site. Vista 99 is a more traditional apartment community consisting of 554 units in total.
One of biggest of all new developments is easily Crescent Village (pictured here). The project, developed by Irvine Company, opened in 2012 and contains 1,750 apartment homes. The complex includes an impressive 5-acre park, multiple pools and fitness centers, a spa, and on-site movie theater. Realizing the success of this project, Irvine Company went on to develop several other apartment buildings nearby – including The Redwoods, River Oaks and Brandon Park.
Any local landlord or San Jose property management company will tell you the same thing: the North San Jose apartment market is hotter than ever.
We’re starting to see recently completed apartment complexes trade at incredible prices. For example, Essex Property Trust shelled out a cool $92.8 million (the equivalent of $507,000 per unit) for the 183-unit Enso apartment building at 175 Baypoint Parkway. The project had only been open for a year at the time it was sold. The Enso Apartments become the latest addition to Essex Property Trust’s North San Jose portfolio, which also includes the 769-unit Epic Apartments that came online just a few years ago.
Most of the buildings going up in North San Jose are luxury apartment communities that are rich with amenities tailored to the area’s young, upwardly mobile tech workers. Landlords and San Jose property managers are easily getting $2,000+ a month in rent for these units.
By the looks of the city’s North San Jose area plan, adopted in 2005, we suspect these trends will continue. The area plan calls for upwards of 26.7 MSF of office space, 32,000 new residential units, and close to 2.7 MSF of retail.
It’s not just San Jose property managers, landlords and investors who have taken notice of the city’s potential. Apple is planning an 86-acre R&D campus in North San Jose, and earlier this month Google announced its intention to explore building a new “mega-campus” that could swell to 8 MSF of total mixed-use development near Diridon Station.
This isn’t the first time North San Jose has earned the honor of being one of the nation’s most active markets for new apartment construction. Just last year, North San Jose/Milpitas landed the #6 spot on a list of the nation’s busiest apartment submarkets, clocking in a growth rate of 80.7% since 2012.
North San Jose, once a bedroom community for Silicon Valley, is starting to come into its own as a tech hub in its own right. As more companies like Apple and Google put down roots in San Jose, it will only increase demand for new apartment construction.
As always, we will follow development trends in North San Jose in order to keep San Jose property managers, landlords and prospective investors up to date on new opportunities.