Blackstone Group LP is working with a partner to develop a $150 million residential and retail project in Oakland, California, as the city’s real estate market benefits from the San Francisco Bay area technology boom.
Blackstone and CityView, a property company started by Clinton administration housing official Henry Cisneros, bought the land in January and want to begin construction by the end of the year, said J. David Martin, chairman of the investment committee at CityView. They plan to build as many as 435 rental apartments and have about 24,000 square feet (2,230 square meters) of retail space, he said.
Oakland, long associated with crime and blight, is attracting investors as residents priced out of nearby San Francisco move to the area and drive up housing costs. The project with CityView would be the first in the city for Blackstone, the world’s biggest real estate private equity firm.
“The Bay Area generally is short of housing, and particularly housing that’s reasonably priced,” Martin said in a telephone interview. “We think there’s more growth to come. We like the direction that Oakland is headed.”
Peter Rose, a spokesman for New York-based Blackstone, declined to comment on the project, which was reported earlier Thursday by the San Francisco Business Times.
The Oakland-East Bay area ranked fourth in the U.S. for apartment-rent growth in the first quarter, with a 6.2 percent increase from a year earlier, according to Reis Inc. The average effective apartment rent, or the cost after any landlord discounts, was $1,575 per month, compared with $2,280 for San Francisco and $1,132 for the country.
The Blackstone and CityView project site is at 3093 Broadway, a boulevard lined with auto dealers, according to plans filed with the Oakland planning department. The development, on 3.4 acres (1.4 hectares), will include as many as 621 parking spaces and 266 spaces for bicycles.
The project will have five stories of apartments on top of one floor of retail, Martin said.
“We’re building more of a mid-rise and that allows us to have rents that are more affordable than a luxury might be,” he said.
Blackstone and Los Angeles-based CityView have worked together on more than 20 projects, Martin said. Last year, the companies completed Barker Block, a condominium development in a warehouse district of Los Angeles.
While development isn’t a big part of Blackstone’s business, the company has been doing more deals as it accelerates investments in residential real estate. The firm began buying foreclosed houses in 2012 and is now the country’s biggest single-family landlord through its Invitation Homes unit.
Blackstone also has been acquiring apartment buildings after forming a rental company called LivCor.