Oakland Affordable Housing Development Lands $32M Loan
- Feb 28, 2019
oWow has received a $32 million construction loan to develop a four-story, 91,180-square-foot live/work affordable rental project in downtown Oakland, Calif. Parkview Financial provided the financing for the 102-unit building.
“The developer’s approach to this market and project is entrepreneurial and somewhat counterintuitive at face value,” Paul Rahimian, Parkview Financial’s CEO, told Multi-Housing News. “In a market where developers are building micro-units, a developer who proposes these macro-units may not get past the first conversation—with a traditional lender, the conversation stops there. With our very hands-on approach, we were able to continue the conversation and take the time to understand the developer’s unique approach to this market segment.”
Located on 1.44 acres at 1919 Market St., the adaptive-reuse project was once an industrial-zoned Greyhound Bus Terminal. That history, along with the development’s location, will be big draws to potential tenants.
“It is a newly gentrifying area with new, hip restaurants and retail amenities,” Rahimian said. “It is highly walkable and in a centrally located area, with access to multiple BART terminals—all walkable distances. Further, the property has a very high bike-ability score of 97.”
The property will offer three and four-bedroom apartments and lofts with ceiling heights up to 24 feet, vinyl flooring, stainless steel appliances and full kitchens. Exterior walls will retain elements of the original industrial façade. Additionally, 1919 Market St. will boast landscaped courtyards, a retail coffee bar in the lobby, a resident lounge and bike room.
The Case for Macro-Units
Once comfortable with the asset, Parkview Financial felt it made more sense than some micro-unit projects it has seen in other metros with comparatively higher costs per bedroom.
“The development provides three- and four-bedroom efficiency units targeted at middle income renters,” Rahimian said. “Market research suggests that a significant portion of this income class fits in a demographic that will receive more value for their money from sharing an apartment with friends rather than living in a studio on their own. Part of that value is saving on housing costs. These three- and four-bedroom units are cheaper on a per-bedroom basis than a comparable studio.”
Given the huge lack of supply of multifamily in Oakland, especially in the downtown area, this property will provide an alternative asset offering affordable living for multiple residents in an area lacking of apartment living spaces.
From a trend perspective, over recent months, the company has seen banks even more hesitant to lend in situations like these as there has been talk of a slowing down in the real estate cycle and they don’t want to take back assets like they did a decade ago.
“This loan, however, was a good fit for Parkview Financial as our firm is able to provide construction loans that are more challenging for developers to obtain,” Rahimian said. “Banks often times don’t want to take on the risk for redevelopment in emerging markets. 1919 Market is a project we are extremely confident with as there is such a short supply of affordable housing not only in the Oakland area, but the greater San Francisco region as well.”
The project is expected to be completed by June 2020.
In November, LMC topped out the 34-story luxury apartment and retail building it is constructing at 447 17th St. in Oakland, its first development in this Bay Area city. The mixed-use development, expected to be ready for move-ins by June 2019, will have 254 units and 4,800 square feet of ground-floor retail space.
Image courtesy of Parkview Financial