OAKLAND — A big apartment tower in downtown Oakland has been bought by a busy local real estate investor in a deal that hints at distress and fading values for the East Bay’s multifamily residential market.
An affiliate controlled by Three Steps Properties has paid $78 million to buy a 24-story apartment tower at the corner of 17th Street and Webster Street in downtown Oakland, according to documents filed on April 11 with the Alameda County Recorder’s Office.
24-story, 206-apartment housing tower at 1700 Webster Street in downtown Oakland, in a July 2024 image capture. (Google Maps)
An affiliate of the Union Labor Life Insurance Co. sold the 206-unit apartment complex to Three Steps Properties, the county records show. The highrise has addresses of 1700 Webster Street and 330 17th Street.
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The purchase of the Oakland apartment tower is the second deal in the East Bay city in recent months by Three Steps Properties.
In December 2024, an affiliate of Three Steps Properties paid $99 million for a 254-unit, 34-story apartment tower at 447 17th Street in downtown Oakland.
The two Oakland towers that Three Steps bought over the last four months are separated by about two blocks.
The purchase prices mean that Three Steps paid about $389,800 per apartment for the tower at 447 17th Street and then, four months later, paid about $378,600 per apartment for the 330 17th Street tower just down the street.
As for the just-bought 330 17th Street tower, Union Labor Insurance Co. seized the apartment complex in August 2024 through a streamlined process akin to a foreclosure, according to Alameda County property documents.
The unpaid debt at the time of the lender’s take-back was $89.3 million, the county records show.
This month’s property purchase and the prior foreclosure at 330 17th Street both point to a distressed market in the East Bay for large apartment towers.
Why? The latest purchase price for the landmark tower is 39.6% less than the property’s value of $129.2 million in January 2024, as calculated by the Alameda County Assessor’s Office.
Plus, the lender that had foreclosed on the 330 17th tower and then sold it also provided $65.6 million in financing to the new buying group.
Sellers often provide financing to buyers to induce the prospective new owner to purchase a property at more attractive terms than would otherwise be the case. In this particular transaction, the movitation behind the seller financing wasn’t specified in the public documents.
Real estate firm Gerding Edlen developed the tower. Gedring Edlen lost ownership of the highrise through the in-lieu-of foreclosure proceeding.
When the 330 17th tower, known as ZO, was completed in 2019, it was a notable addition to the downtown Oakland skyline. At the time of its completion, ZO was the first apartment highrise to break ground in Oakland since 2008.
The dramatic reduction in the 330 17th tower’s value could make it easier for the new ownership group to dangle attractive rents in front of tenants. The deal might also improve the property’s overall financial picture.
The ZO website also lists numerous amenities for residents of the tower, including dramatic view in all directions from its upper floors.
“A laid-back lounge for billiards or fireplace hangouts, a lush outdoor terrace with firepits and grilling stations, and an open lobby with outdoor patio” were among the amenities that were featured on the ZO website.
