"Historically, the Scottsdale multi-housing market has experienced high barriers to entry due to a limited number of available investments," says Karl Abert, a broker with the Phoenix office of Marcus & Millichap. "In the face of the volatility of the national economy and the local real estate market, apartments are sound investments."
The class B apartment, which was built 13 years ago, sold in six weeks, Abert says. "Despite this property's age relative to the amount of surrounding new product, we were able to demonstrate to the buyer that with continued renovation and repositioning, as an investment, Joshua Tree has tremendous upside potential," he adds. Kowalski plans to spend $750,000 in the next 12 to 18 months on improvements to the property. The Phoenix office of Marcus & Millichap, with brokers Abert and Peter Katz, negotiated the sale.
The speed in which the sale of Joshua Tree was made is reflective of the pace of Valley apartment sales since the start of the year, David Wetta, Marcus & Millichap's managing director in Phoenix, tells GlobeSt.com. "It's real active," he says. "There is still a lot of optimism in the marketplace."
From year's start, sales totaled $428 million. That compares to $112 million through June 2000, a total of $517 million, which was a record sales year. In January, there were 10 sales; February, 21; March, 40; April, 56; May, 70; and June, 88. There have been 11 sales through the first half of July. "There has been a renewed interest from investors in real estate," Wetta says. "It's really picking up quite a bit."
Investment money that was previously in the stock market is finding its way into real estate, Wetta says. Investors find that although Phoenix apartments are at their peak valuation, they compare favorably to other apartment markets in the West. Most of thebuyers are from out of state, he says.
Wetta expects that the number of sales will come close to the record number posted last year. Those sales last year totaled more than $1 billion. "We could very easily hit 190 transactions," he says. "For it to even be close is nothing short of amazing.
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