Small Is the New Big For Multifamily
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It may be only four stories and 18 units, but a Little Italy apartment building fetched a hefty 4.5% cap rate from a regional investor thanks to a perfect storm of low interest rates and limited product on the market.
We spoke with Colliers International SVP Peter Scepanovic who, along with associate Corey McHenry, just sold 1941 Columbia St, a 12,500 SF apartment complex near the Bay in Little Italy for $6.2M to Allen Properties Group. And this was the second time the property was under contract, despite only just delivering in February. That deal ultimately fell through, but he says every building he lists is selling pretty quickly.
While not one of San Diego's towering apartment projects, 1941 Columbia's sales price did benefit from factors well beyond its structure. First, San Diego's apartment market has strong fundamentals, with vacancies in the low single-digit range. Couple that with rising rents, a lack of new supply coming on line and continued low interest rates, and Peter says “it's hard not to create an argument that we're in a very good spot for the foreseeable future.”