HK3 Sells Southsider Apartment/Retail Project South Of Downtown Sacramento To Ventura Buyer

In a rare new urban development sale, the Southsider project south of Downtown Sacramento is now owned by an investor from Ventura County.

Turton Commercial brokered the sale of the four-story apartment and retail project developed by HK3 Development, which didn’t return a message seeking comment.

“We always loved the diversity of Southside Park, and believed it flew under the radar given its proximity to Downtown, Midtown, parks, recreation, restaurants and nightlife,” HK3 Principal Fred Khasigian said in an announcement about the sale released by Turton Commercial. “After speaking with residents and doing community outreach over several years, we decided to execute this project and by 2021, we were proud to deliver Southside Park’s first mixed-use project.”

HouseHack Inc., with an address in the city of Ventura, bought Southsider for $7.35 million in an all-cash deal. Completed in fall 2020, Southsider is at 2030 10th St. and has 21 apartments and about 3,000 square feet of ground-floor retail.

At the time of close of escrow earlier this month, the property was fully occupied, according to Turton Commercial. Based on a blended cap rate between the apartment and residential portions, the 14,713-square-foot building sold for $500 a square foot, according to Turton.

The buyer, HouseHack, appears to be an investment company specializing in flipping residential properties. A message left with HouseHack founder Kevin Paffrath Tuesday wasn’t returned.

Escrow for the property closed in 24 days, according to Turton Commercial, noting Southsider is the first apartment property of more than 15 units to have sold in Midtown or Downtown Sacramento in the last six months.

With hundreds of new units coming online in the last few years in the central city, apartment rents have flattened and many properties are now offering a month or two for free with a signed lease. Those factors have softened the investor appetite for new buildings like Southsider.

Ken Turton and Jon Lang of Turton Commercial represented the seller in the deal.

HK3 is now turning its attention to a new ground-up project of 38 units at S and 28th streets near Midtown Sacramento, and completing redevelopment of a closed senior living property at 27th Street and Capitol Avenue in Midtown into 62 market-rate units, Khasigian said.