MILPITAS — A big Milpitas apartment complex with hundreds of units has been bought for more than $100 million in a deal that hints at weaker residential values in the Bay Area.
The Harlowe, located at 1821 South Milpitas Boulevard near East Capitol Avenue, has been bought for $109.3 million, according to documents filed on Oct. 9 with the Santa Clara County Recorder’s Office.
Pacific Urban Investors, a veteran Bay Area real estate firm that acted through an affiliate, bought the 266-unit, five-story apartment complex, the county documents show.
Berkeley Point Capital provided a $55 million loan to finance Pacific Urban Investors’ purchase of The Harlowe apartment property, according to the real estate records.
Built in 2021, The Harlowe apartment complex is near both The Great Mall and the Milpitas BART station.
Despite a price that tops $100 million, the deal suggests values for Bay Area apartment complexes might be starting to tumble.
That’s because Pacific Urban Investors paid less than the assessed value of the apartment complex to buy the residential property.
In January 2024, the apartment building was valued at $132.8 million, according to documents on file with the Santa Clara County Assessor’s Office.
This means the new owner paid 17.7% less than the apartment complex’s assessed value.
The forbidding economic realities for Bay Area office, hotel and retail properties are well-known and worsening, experts say. Foreclosure proceedings occur more frequently. Property values have wilted for these kinds of commercial properties.
Conventional wisdom has suggested that residential properties such as apartment buildings have been largely able to escape the economic jolts that have shaken the finances of hotels, offices and retail sites — until recently.
A growing number of Bay Area apartment properties have been seized through foreclosures or bought at prices well below their assessed value or previous purchase amounts.
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This suggests even multifamily residential properties are starting to encounter fading values despite the fevered demand for housing in the Bay Area.
Slumping values for commercial real estate could begin to imperil finances for Bay Area cities, counties, regional agencies and school districts that depend on property taxes to help enrich their coffers.
Lower prices for office, retail and hotel buildings could squeeze property tax revenue over the next year or two as assessors wrestle with the new reality for real estate values. Weaker prices for apartment buildings might well darken the tax revenue picture.
As for The Harlowe apartment complex in Milpitas, the new owner is a veteran of the apartment market.
Apartment industry veteran Al Pace and real estate industry icon George Marcus co-founded Pacific Urban Investors in 1998.
Palo Alto-based Pacific Urban has over $8.5 billion in assets under management. The real estate firm owns and manages a national portfolio of more than 23,000 units, according to the Pacific Urban website.