Steve Eggert's Anton Development joins the multifamily movement in Milpitas



Steve Eggert, president of Anton Development Co., knows there are a lot of new residential units coming online in Milpitas.

That might scare off some multifamily developers worried about oversupply. But Eggert sees something else going on: a once-in-a-generation opportunity, spelled B-A-R-T.

“That’s why this Milpitas deal is really exciting, because it’s not down the street from BART, it’s not near BART — it’s on BART, and VTA light rail,” Eggert said. “It’s fantastic.”

The Milpitas deal Eggert is excited about will total 580 units on nine acres, what’s currently a truck terminal at 700 E. Capitol Ave., near Montague Expressway. Anton closed on the first 4.5 acres last week for an undisclosed sum.

It’s the first Silicon Valley project for Anton Development Co., but if the name sounds familiar, there’s good reason: Eggert was one of the co-owners of St. Anton Partners, a Sacramento-based firm that developed thousands of units in Sacramento, the Bay Area and Orange County for two decades.

Last year, he and his partner, Peter Geremia, went their separate ways, though they remain partnered on several projects under construction, such as Anton Menlo, 394 units near the Facebook campus. (Geremia’s St. Anton Capital also remains active and is developing three projects in the Bay Area, while looking for more.) Eggert declines to discuss details of the split, but says he was more comfortable pursuing institutional equity, larger projects and third-party construction.

Eggert’s Anton Development opened offices in Foster City last fall, and plans to do about 800 to 1,000 units per year, primarily in the Bay Area, though it is also interested in Orange County and Sacramento on a selective basis. Executives are planning a pipeline that’s about two-thirds market rate and a third affordable, said Andrew Baker, senior vice president of development and acquisitions, who spent eight years at Essex Property Trust before joining Anton Development last year.

“We have the expertise,” Baker told me. “It’s a very nuanced business, and you have to have deep relationships with cities and agencies, which we do. (Affordable is) really a strong business model.”

Anton Development’s Milpitas project is spitting distance from the new station, which is rapidly reaching completion and is slated to begin passenger service next year. This phase of the BART extension will take the fixed-rail line south to San Jose’s Berryessa station; ultimately, it will extend to downtown San Jose and Santa Clara, though funding for the final leg hasn’t been locked down. Even next year, though, it will whisk commuters up to job centers in Oakland and San Francisco in less than an hour.

The Milpitas project checks the boxes on Anton Development’s wish list: It’s near transit and strong job growth, and located in an area where the city is supportive of seeing dense development.

“Anything 50 units to the acre would be minimum,” Eggert said. “Milpitas is close to 75 to the acre. In Emeryville, we’re doing a seven-story: Five stories of wood frame over two stories of podium. That’s how it’s got to be. It’s where the land-use requirements are.”

Still, Anton Development is looking to grow after years of strong development activity and steep rent increases. There are some signs rent growth is cooling, and job growth — the most important metric for multifamily developers — is slowing. Milpitas in particular has seen a flood of new for-sale and rental units as the city’s Transit Area Specific Plan — a mammoth industrial-to-residential conversion area centered on the new BART station — gets built out.

Adjacent to Anton Development’s new project, Lennar is building a 489-unit building at 450 Montague Expressway. On the other side of the street, SummerHill Apartment Communities is planning for 720 units on a roughly 10-acre site. Lyon Communities is under way on something called The District, which will add 371 units nearby. Lyon also controls a larger development site that could add hundreds of units beyond that.

Eggert, though, sees the bump in supply as all relative.

“From a macro standpoint, between all three (metro areas in the Bay Area) we’re talking 120,000 jobs per year and 8,000 housing units,” he said. “We all witnessed in 2013 and 2014 when all the product came online in North San Jose. We were all terrified. We were (building) in South San Jose and were very concerned. But we saw the marketplace just rolled through that.”

Now, the North San Jose market has reached a cap on new units, thanks to city land-use guidelines. That’s good for Milpitas, which functions as something of an extension of that market.

“We make our pro forma on current rents,” Eggert said. “I think we’re expecting a rate of rent growth that matches expense growth. We’re not going into this counting on 10 percent. I do see rents going up, but you’ll see four to five” (percent annually).

Anton Development has two other projects in the works: “Evolve,” which will have 186 units in Emeryville, and Anton Mountain View, with 144 units. The Milpitas project will feature an outdoor yoga lounge, rooftop terraces and high-end finishes. Grading could begin in the third quarter, following planning commission approval early this year. Units could be delivered in 2019.

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