The same supply constraints that have buoyed San Francisco’s condo market amid the pandemic could also be a lifeline for Oakland’s.
Though Oakland remains a stronghold for Bay Area apartment growth, condos in the East Bay have been a much different story. Oakland and Emeryville saw a combined 246 condo deliveries in 2019, a fraction of the nearly 2,500 new apartments that came online last year, according to Polaris Pacific research.
That lopsidedness is expected to continue, which will serve current condo sellers well, Polaris Pacific partner Paul Zeger said.
“The reality of the East Bay right now is there’s a much smaller pipeline of new condominium developments,” he said. “Most of the product being delivered in Oakland in the near future will be apartments.”
Like with apartments in San Francisco, apartments in Oakland have tended to be more financially feasible for builders than condos, according to Zeger. While REITs and other national developers that build many of Oakland’s new apartments often accept single-digit returns, condo builders are still looking to get returns well into the double digits, a task made challenging by the Bay Area’s ever-growing construction costs.
“Right now, you pretty much have to get $1,100 or $1,200 per SF to justify new concrete construction in the East Bay,” Zeger said. “And right now the market is probably more in the $1K to $1,100 SF range, which means you’re not generating a lot of new product.”
As of June, Oakland had 353 condos approved or under construction versus 12,209 such apartments, Polaris Pacific’s latest report shows. All told, Oakland and Emeryville currently have 127 new condos on the market spread across three projects.
One of those projects, The Pauls Corp.’s 901 Jefferson, hit the market in May with 75 new residences, two of which were under contract as of last month, with sales being led by Polaris Pacific.
The other two projects with new available units, City Ventures‘ Ice House community in West Oakland and Discovery Builders‘ Skyview community in the Oakland Hills, hit the market in 2018 and have 24% and 40% of their residences available, respectively, according to Polaris Pacific’s June report.
Oakland’s median condo price during a three-month period ending May 31 was $625K, according to Polaris Pacific.