Smith is one of the Paragon brokers to have collectively closed nearly $10 million in Capitol Hill properties since the first of the year. Compared to the previous two years, Smith notes that 2002 deal velocity, as well as prices, is relatively the same.
On one property, however, the story was quite different. Paragon's Chris McCarty represented the buyers on a 59-unit property at 535 13th Ave. E. "The seller (from Hawaii) had owned the building for about ten years and wanted to realize his gain and move into an industrial 1031 exchange," begins McCarty. "Back in July there were 11 offers on the building, many of which were above list, and our client put down non-refundable earnest money to get the sale."
Then, after September 11, McCarty continues, the lenders equity requirement doubled, and the buyer walked from the deal and his money. But McCarty did not let the deal die here. And, after the first of the year he was able to resurrect the transaction—and the $6.1 million McCarty's client paid was about $450,000 less than the original deal. The broker did not discuss the size of the deposit made last summer.
Paul Mickley, also with Paragon, recently closed a $1.09-million property at 601 E. Roy St. "There aren't a lot of properties for sale here right now, and when there are—they're selling," Mickley quips. The broker who represented the buyers says they had recently sold a commercial property in the University district, and put well over 50% down here in a 1031 exchange.
Smith tells GlobeSt.com that Capitol Hills is known for having the highest density in the state. "For the most part, these are bread-and-butter properties," he says, "and, fifty-two percent of them are renters."
All factors on the hill, says Smith, combine to make this one of the most stable in the city in terms of occupancy. He offers an anecdotal measurement passed to him by an investor in the 1970's, "They said starting at the Space Needle, for every mile out you move, you can expect to add another percentage point in vacancy, and that has always held fairly well."
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