By Laura Waxman
The developer of a new rental apartment building in downtown Oakland has walked away from the project — a move that underscores the distress building in the city’s multifamily market.
On its website, developer Mill Creek Residential indicates that it “sold” its less than two-year-old, 173-unit residential building at 1940 Webster St., which until recently was known as Modera Lake Merritt, in January.
Public documents filed this month by the developer’s former investor on the project — which is now its owner — give insight into some of the struggles that Mill Creek and other similarly situated housing developers in the city are facing in the wake of the pandemic. Thousands of units were delivered in downtown Oakland in the years leading up to COVID-19, but the city’s multifamily market has since been contending with softening tenant demand and dipping rents. Meanwhile, an estimated $2.6 trillion of real estate loans are coming due across the country through 2028, and multifamily loans account for 38% of that value.
UDR, a publicly traded real estate investment trust, confirmed in its fourth quarter 2023 earnings report, released on Wednesday, that it “took ownership” of Modera last month. The building, which offers studio, one-bedroom and two-bedroom apartments starting at $1,779, $2,175 and $2,880, respectively, has been rebranded as Residences at Lake Merritt.
“I think everybody is pretty familiar with what happened in Northern California since pre-COVID, with rents still being down and then in downtown Oakland, perhaps one of the worst submarkets in that respect, with rents still down 30% plus,” said UDR President Joe Fisher during an earnings call Wednesday. “And so we did take the keys back on that asset, as the developer didn’t want to continue to support the cash flow shortfalls.”
Read more at: San Francisco Chronicle