In a testament to Silicon Valley’s mounting appeal among multifamily and housing investors, an Arizona homebuilder has acquired a 1960s-era apartment complex for tens of millions of dollars only to flatten the site and rebuild something newer.
Taylor Morrison, one of the nation’s largest residential developers, acquired the Mountain View Gardens complex in the tech-concentrated suburb of Mountain View, California, for $57.4 million, according to Santa Clara County property records. The deal with seller Spieker Cos., which first acquired the 70-unit property for just shy of $3 million in late 1993, closed earlier this month.
The latest purchase price equates to about $820,000 per unit, a significant premium above the regional average of nearly $690,000 per unit that has been reported among similar multifamily deals over the past year, according to CoStar data.
That price tag also signals that, while remote work and tech layoffs have dealt hefty blows to other pockets of the real estate industry, Silicon Valley’s multifamily market continues to build on its pre-pandemic momentum.
While it took some time to finalize, Taylor Morrison and Spieker Cos. signed a purchase agreement for the property at 570 S. Rengstorff Ave. in late December 2021, according to public filings.
Revised details for the redevelopment have yet to be made public, but city council officials have already signed off on plans to demolish the existing complex and build as many as 85 rowhouses divided among 11 buildings. Those plans were included in a proposal submitted on behalf of Spieker Cos., and while they secured the council’s approval, little progress has been made since.
It is “too soon to discuss details of this project,” a Taylor Morrison spokesperson told CoStar News when asked to provide specifics. Representatives for Palo Alto-based Spieker did not immediately respond to CoStar News’ requests for comment.
Between the proposal’s submission nearly two years ago, however, Silicon Valley’s housing market has become even more desirable. As one of the priciest in the nation, average rents in the Mountain View area have climbed by another 2% over the past year to settle at roughly $2,950 per month, according to CoStar data.
Limited construction and the region’s worsening housing shortage have only compounded demand among both renters and investors. Buyers have collectively spent more than $1.8 billion on multifamily property deals over the past year, according to CoStar data.
What’s more, a majority of those deals have been focused on the land value alone. Of the 110 sales that closed since this time last year, more than 90 were for those in the lower tier of the market, often aging, dilapidated properties in need of steep repairs and additional investments that can make it more attractive to simply clear out existing structures and redevelop the site.
Scottsdale, Arizona-based Taylor Morrison is no stranger to the San Francisco Bay Area’s housing market. The Mountain View site will join its collection of residential projects across the region, many of which are concentrated in East Bay cities including Vacaville, Hayward, Pittsburg and Dixon.
Taylor Morrison also has sites in nearby Silicon Valley suburbs such as Cupertino and Sunnyvale, where the starting price for a single-family house is more than $1.85 million, according to the developer’s website.
