Almost two years after opening a waterfront apartment complex in Oakland, the developer is pivoting in response to what it sees as an oversupply of rental buildings and a shortage of middle-class homeownership opportunities in the San Francisco Bay Area.
The 371-unit Caspian apartment building began leasing rental units in 2023 as part of the East Bay region’s largest mixed-use project. After securing residents for 80% of the rental project, the owners — Signature Development Group — are marketing the remaining units as for-sale condos. As tenants leave, the rest of the project will gradually be converted to condominiums.
The Caspian is part of the Brooklyn Basin development, a $2 billion transformation of 65 acres on Oakland’s old industrial waterfront into a mixed-use neighborhood with homes, shops and parks. The condos will be the first homes offered for sale as part of the Brooklyn Basin project, some two decades in the making.
“We were getting a lot of calls about opportunities for homebuyers, and we had no units to offer,” Signature founder and President Mike Ghielmetti said. “Oakland has a lot of new multifamily homes that have come on the market in the last few years, but there are very few condos.”
Seven buildings have been constructed so far at Brooklyn Basin, totaling more than 1,500 units, including several hundred affordable units priced at below-market-rate rents for those who qualify. The sweeping redevelopment promises a total of 3,100 homes, 200,000 square feet of shops and office space and 30 acres of open space on the site of a former shipping dock.
The 371-unit Caspian began leasing units marketed as luxury apartments two years ago, with rents from around $2,000 per month for a studio to some $5,300 for a three-bedroom apartment.
At the time, Oakland's rental market was being flooded by new high-rise apartment buildings planned several years before, when office and residential vacancy rates were at record lows in the Bay Area's second city. Thousands of units came online in the early years of the pandemic, as high supply and low demand pushed rents dramatically downward. Some 15 buildings sprang up around downtown Oakland in the past seven years.
History repeats itself in Oakland
Ghielmetti said the Caspian has been “leasing up well” since coming on the market two years ago. He added that Signature had planned for a possible conversion to condominiums as a long-term plan for the development from the beginning.
“Given the amount of new rental buildings in Oakland over the last several years, it seemed like the right time was sooner rather than later,” he said.
The condos are priced at $349,000 to $799,000 for one- and two-bedroom units.
The shift may echo one that took place during another boom-bust housing cycle in the Bay Area early in the century. Condominium developments were encouraged at the start of the 21st century to bring thousands of new residents to the city's core, but many came online following the Great Recession, in the depths of the real estate downturn.
Some coped by becoming for-rent apartment buildings instead. But then, as the housing picture recovered in the Bay Area, several East Bay and South Bay developments switched back to for-sale condos. The Bond, a 101-unit complex in Oakland's Jack London Square, sold out in a month in 2013 when it converted its rental units to condos.
Then Oakland’s office and housing market were heating up, as tech companies and employees in San Francisco began to flood in from across the bay, drawn by the easy commute and cheaper rents. There are signs that history may soon repeat itself.
In recent years, Oakland has struggled with rising crime, businesses shutting down, a cash-strapped city government and the loss of all three of its major sports teams. Now, Oakland rents are beginning to climb again after three years of steady declines, with annual growth reaching 1.3% in the current quarter, according to CoStar.
The common real estate market wisdom in the Bay Area is that Oakland follows one to two years behind whatever is happening in San Francisco, Ghielmetti noted. In the past few months, the artificial intelligence boom has helped transition San Francisco out of its “doom loop” to register the fastest rent growth in the nation.
“It’s not any different than in 2009,” when Oakland looked to be poised for a housing and office market boom, Ghielmetti said. About a decade ago, Oakland had one of the hottest residential markets in the nation.
“It’s tough to bet against the Bay Area. There’s a scarcity of housing, and it’s the innovation capital of the world,” he said.