Attractive, well-located downtown hi-rise apartment building owned by the original developer.
The property suffered from unusually high vacancy on the top four floors because rents were too high for the market. At the time we acquired the property the overall market was suffering from high vacancy and steep concessions due to oversupply. From a distance, the property was impressive and eye-catching, but up-close, it lacked an identity as a premier rental property. Signage was poor and the interior of the building had a commercial, rather than a residential feel.
Occupancy in the rental units improved almost immediately once the rent structure was realigned. The 33 condo units were sold out in two years at an average price of $350,000 per unit compared to our initial cost of $110,000 per unit when we acquired the property. NOI improved by approximately 35% over the first two years as vacancy declined and free rent 'burned-off'. Once the market stabilized, and vacancy returned to normal levels, rent growth averaged 5% per year. During our holding period, the value of the 256 rental units doubled.