Weekly Real Estate News
Summary
Kennedy Wilson and Japanese partners Hulic and Fuyo acquired One South Market in San Jose for 176 million dollars, adding 312 apartments and retail space.
A joint venture led by Kennedy Wilson has acquired a 312-apartment tower in downtown San Jose for $176 million, bringing Japanese institutional capital into a completed Silicon Valley rental property.
Kennedy Wilson said October 14 that it closed the purchase of One South Market with Hulic Co. and Fuyo General Lease (USA). The transaction is Kennedy Wilson’s fifth joint venture with Hulic and its first with Fuyo, according to the company’s announcement.
Built in 2015, One South Market is near San Pedro Square in downtown San Jose. The property has 312 apartments averaging about 907 square feet, plus 6,534 square feet of fully leased ground-floor retail. The building is close to major technology employers, downtown amenities and regional transportation connections.
Why investors are buying existing apartments
The acquisition provides the buyers with an operating property rather than a development project. That distinction reduces exposure to construction delays and cost overruns, but investors still face leasing, expense and valuation risks.
At the reported purchase price, the transaction equates to roughly $564,000 per apartment before allocating value to the retail space and other factors. That simple calculation is not a valuation of individual units or an indication of net operating income.
Kennedy Wilson said the investment fits its strategy of acquiring quality multifamily properties near major employment centers with limited new supply. The buyers also cited downtown San Jose’s connections to the broader Silicon Valley technology sector.
Institutional demand for existing apartments can persist even when mortgage rates and financing costs are elevated. Buyers may be willing to invest when the expected income stream and long-term market position justify the price. However, the announcement did not disclose all financing terms or a projected return.
The participation of Hulic and Fuyo also highlights the international nature of U.S. multifamily capital. Foreign investors can gain exposure to American rental housing through partnerships with local operators that understand property management and market conditions.
The transaction is completed, not a pending agreement. Its next test will be operating performance: occupancy, rent growth, expenses and the ability to retain residents as the San Jose rental market evolves.
