SANTA CRUZ – An out-of-town company has acquired the 104-unit Oceanview Apartments, two blocks from West Cliff Drive and Monterey Bay, for $40.68 million, sending rents skyward.

The sale price tops the $33 million paid last year for the 100-unit Breakwater Apartments in the Twin Lakes area.

The new Oceanview owner is Acclaim Cos. in Menlo Park, which develops, builds, acquires, owns and operates more than 1,000 apartment units in Northern California and Texas, and works to “deliver exceptional returns to its investors,” according to the company website.

Acclaim founder Mark Johnson did not return a call seeking comment.

Oceanview Apartments was built at 222 Columbia St. in 1969.

The price the new owner paid is about $391,000 per unit, “about right for older construction,” said Reuben Helick, managing director at Cushman & Wakefield and a longtime commercial real estate specialist.

The Breakwater buyer paid $330,000 per unit.

In March, the median condo price reached a record $575,000.

To see how rental rates have changed, the Sentinel checked the Oceanview website at oceanview-apartments.com and a 2014 housing market study commissioned by UC Santa Cruz, finding an increase of 34 percent to 47 percent over three years.

The U.S. rate of inflation was 1.3 percent last year, .1 percent the year before that and 1.6 percent in 2014.

Oceanview is advertising a one-bedroom 750-square-foot rental for $2,645 to $2,895 a month and two-bedroom units ranging from 835 to 1030 square feet for $3,100 to $3,895 a month.

In 2014, Oceanview’s 740-square-foot unit rented for $1,974, according to the UCSC study, and two-bedroom units rented for an average of $2,489.

Rents are up at the Breakwater after a May renovation.

Apartments.com reports a one-bedroom 624-square-foot unit rents for $2,400 a month – up 49 percent from 2014 – and a two-bedroom 860-square-foot unit is $2,850 a month.

The 2014 UCSC study reported rent for the 624-square foot unit was $1,613 a month and an a two-bedroom 892-square-foot unit was $1,953 a month.

“Landlords of existing rental properties are enjoying the benefits of high demand and low supply,” Helick said.

The UCSC study contained data on 20 multifamily apartments within seven miles of the campus with an occupancy rate of 99.7 percent.

Oceanview Apartments was the oldest, and a 113-unit complex at 1010 Pacific Ave. was the newest, built in 2004.

There is not much volume in multifamily sales locally, perhaps 15 to 20 a year, according to Helick.

During the first quarter of this year, Oceanview Apartments was one of five properties sold in Santa Cruz County, according to CoStar, which specializes in commercial real estate information.

Currently, 15 multifamily properties are available for sale in Santa Cruz County, according to CoStar.

A fourplex at 122 Blackburn St., Santa Cruz, built in 1962, changed hands in March for $1.3 million – $325,000 per unit.

The listing called it a “nice investment opportunity near downtown.”

Construction of dwellings with five or more units in Santa Cruz County plummeted to 17 units in 2009 in wake of the housing crash, and did not rebound for five years, according to statistics kept by the Texas A&M University Real Estate Center. In 2015, permits were issued for 120 multifamily units, and in 2016 for 250 units.

Asked if values have risen enough to encourage investors to build rentals, Helick said, “I think so, but with rising interest rates, increasing costs of construction, expenses associated with inclusionary units, it is a difficult task.”

Locating the right site is very difficult, he said, and making all the numbers work due to the various costs is challenging.