El Cajon's $224,576 basis prices supply, not rent growth

Marcus & Millichap has closed the sale of 229 Shady Ln., a 59-unit El Cajon apartment property of circa-1969 vintage, for $13.25 million, or $224,576 a unit, per Connect CRE. The seller was the Mary Susan Curry 2020 Revocable Living Trust and the buyer TFT Capital I, which plans to renovate; Austin Huffman and Christopher Zorbas, investment specialists in the brokerage's San Diego office, represented the trust and procured the buyer.

What the buyer is paying for, by the brokerage's own description, is scarcity and a tired building rather than rent growth. Huffman cited "strong renter demand, limited housing supply and opportunities to improve operations over time" as the draw for East County value-add product, but only one of those three legs is a rent argument. The property sits near Interstate 8, the El Cajon Transit Center and the county's employment centers, and the case for a $224,576 basis is that East County does not build enough, with a further nudge from upgraded building systems that let an owner push rents without gutting the place.

The per-unit figure lands between recent comps, a fair reminder of how little a national per-unit number carries: A Section 8 trade closed at $139,419 a unit on an assumed HUD loan, and an $83 million Oregon portfolio cleared at a blended $189,500 a unit, both below El Cajon, while a Pico-Robertson building sold after a 23-year hold at $334,937 a unit. The Oregon trade kept its yield private, and El Cajon does too; the coverage gives no cap rate, no renovation budget and no rent roll.

The apartment bid has split into an income half and a scarcity half, with value-add buyers setting the clearing basis lower while patient capital underwrites the 2028-29 supply gap. El Cajon cuts against the second half. TFT is paying above both the Section 8 and Oregon comps for 1969 stock because the submarket's supply constraint, not the rent roll, is doing the work, and a buyer who pays for scarcity has to renovate to earn it back. That is a scarcity price, hard to read as a lower clearing basis.

An exit price would settle the argument. A renovation trade becomes a comp when stabilized rents and a sale price print, and neither is in the announcement. What El Cajon establishes today is the cost of 1969-vintage stock in a county that underbuilds, which is useful to anyone hunting the same trade and of limited help to anyone arguing about where apartment prices are heading.