New Oakland Multifamily Tower Trades for Half of Assessed Value
It might be hard to remember in the post-pandemic winter of 2025, but a decade ago a commercial real estate boom was building up a head of steam in Oakland.
Oakland experienced a spillover effect from San Francisco’s office market as tech companies like Uber and Twitter opened offices in the city or hatched plans to move there, drawn by lower rents and shorter commute times for East Bay residents.
It may seem like a dream now, as a 34-story, 254-unit luxury tower that opened in 2019 at 447 17th Street in downtown Oakland sold last month for $99M, a 53% discount from a January 2024 assessment of nearly $210M from the Alameda County Assessor’s Office, the Business Times reported.
Three Steps Properties, an Oakland-based private investment company, bought the tower, known as 17th and Broadway, from Quarterra Multifamily, an affiliate of Lennar Homes. The acquisition was financed with a $92.3M loan from MetLife Real Estate Lending.
The good news for landlords is that the multifamily pipeline in Oakland is nearly empty. Only 533 units were delivered in the city in 2023, and at the end of 2024 there were fewer than 400 units in the pipeline. Falling rents are not conducive to penciling out new developments, and some projects are being delayed until market conditions improve.
Oakland-based developer oWow, which last year resubmitted plans and invoked a new state density bonus to supersize its project at 1523 Harrison Street to 500 units, told the Business Times it will wait for a market turnaround before breaking ground.
oWow is planning to build a 28-story mass timber tower on the site, which would become the tallest mass timber building in the U.S.
Another key fundamental providing optimism that the multifamily market in Oakland will be ready for a rebound when the pendulum swings in a positive direction is a solid occupancy rate. While rents are in a trough, occupancy has been stable at 92%.
The downtown area absorbed more than 7,900 apartments, or about 1,600 units per year, during the 20 quarters between 2019 and 2023, compared to an average of 230 units per year between 2010 and 2018, according to JLL data.
But the sagging market in Oakland has put a huge dent in the valuations for buildings, including newly built luxury apartment towers. In the past, the wave of employers leasing large office spaces downtown, accompanied by a thriving nightlife and restaurant scene, spawned a surge in Oakland’s multifamily market. Dozens of apartment towers rose across Uptown and downtown.
According to JLL data, nearly 10,000 new homes were built during a “construction supercycle” between 2018 and 2022. Deliveries, which averaged 163 units per year between 2010 and 2014, surged by nearly 1000% to 1,733 units per year between 2019 and 2023.
City officials turbocharged the supercycle with pro-housing policies that encouraged production with speedy entitlements and approvals for innovative lower-cost construction methods, including plans for buildings made from mass timber.
Multifamily deliveries peaked in 2019 with 2,617 units, but new supply did not slow down as the boom for Oakland’s office market collapsed into the bust of the pandemic. Another 1,898 units were delivered in 2020, followed by 2,229 in 2021, the San Francisco Business Times reported.
In 2025, developers who delivered apartments during the pandemic are confronted with a highly concessionary market that forces landlords to offer lower rents and other enticements to keep their units filled.
Multifamily rents in Oakland fell more than 9% from 2019 to 2024, dropping from an average of $2, 750 per unit to $2,500. Rents in Oakland that historically have been 15% lower than in San Francisco are now 20% below those in the city across the Bay.
Source: GlobeSt/ALM