Oakland’s largest new apartment building since 2011 is now leasing – and filling up fast.
The 162-unit project at 2919 Telegraph Ave., branded as Town29, leased 53 units out of its first phase of 62 units since marketing began in March. The remaining 100 units will open on May 15.
John Protopappas, CEO of developer Madison Park Financial, said the relatively low rents are leading to strong leasing. Asking monthly rents are $2,188 for a 580-square-foot studio, $2,307 for a 705-square-foot one-bedroom and up $3,806 for 1,015-square-foot two-bedroom, or around $3.50 per square foot. Other new projects have asked over $4.35 per square foot. Oakland’s average rent is $2,455 per month, up 3 percent in the last year, according to RentCafé.
"A lot of units are coming to market so we’re not pushing rents," said Protopappas.
Protopappas said the $58 million project can meet financial expectations at those rents because it is short enough to use wood-frame construction, which is much cheaper than a steel-frame highrise. The $358,024 per unit cost is about half of the $659,203 per unit cost, excluding land, of a Temescal tower.
For now, Town29 and Oakland’s other largest downtown projects this cycle are facing minimal competition and finding renters quickly. The 105-unit Mason at Hive at 2350 Valley St. and 80-unit Maxwell at 1801 Jefferson St. are both nearly full. Madison Park also built the 92-unit Lampwork Lofts, a historic renovation of a West Oakland factory, which was fully leased in 2014. Town29 is Oakland’s largest since the 264-unit Domain by Alta at 1389 Jefferson St. in 2011.
Thousands of units are under construction and expected to deliver in the next year, which could lead to concessions like free months of rent or subsidized move-in costs.
"Rent growth should prove resilient, with a mid-single-digit advancement likely, although the urban core where the pipeline is most dense will experience elevated concessions during lease-up," said brokerage Marcus & Millichap in an Oakland multifamily report in January.
Town29 isn’t offering any concessions aside from a $300 discount for move-ins during construction, said Protopappas.
Madison Park partnered with Rafanelli and Nahas and Curtis Development on the project.
Protopappas is seeing strong demand at his smaller projects. At 401 Derby Ave., 62 of the 63 are leased, and 330 Chapman St., which has yet to open, 13 of 41 are already leased, he said.
Town29 had been long-planned. A small version of the project was originally approved in 2007 but stalled amid the recession. The project was approved again in 2015 and was exempt from Oakland’s impact fees for affordable housing that were passed later.
MBH Architects designed the project. Michael Roberts Construction Inc. is the general contractor. Protopappas said the project used a mix of union and non-union labor.
Amenities include interior open courtyards and decks, a gym, pet spa, dog run, barbecue areas and air conditioning in larger units.
The project includes 162 parking spaces that will be leased at $150 per month. City National Bank, a subsidiary of Royal Bank of Canada (NYSE: RY), provided debt financing.
Madison Park has a 398-unit project proposed in East Oakland, a 124-unit project at 3250 Hollis St. set to open this fall and plans to break ground this summer on 47 units at 2968 Hannah St.
The company is mostly focusing elsewhere as Oakland land prices have shot up, and it recently bought three apartment complexes in Portland.
Oakland is "a great market but it’s extremely competitive. Prices are so much higher now than what I’m used to," said Protopappas. "We’re looking for more in other locations."
"By bringing units to market, it’s relieving pressure on the existing housing market…It’s great for the consumer to have lots of choice," said Protoppapas. "We’re going to sit back. It’s challenging to build"