Greg Laycock, with the Seattle office of Cushman & Wakefield, has brokered a number of multi-family properties throughout the Puget Sound. "The (Alexan) price is astronomical for Renton," Laycock informs GlobeSt.com. According to his records, the most previously fetched was $111,875 per unit.
Laycock says the Alexan transaction was driven by the 1031 tax-consequences hovering above the head of the buyer, a Mr. Sobrato of Cupertino, Calif. According to Laycock, Sobrato has been quickly hunting for properties where he could stash cash from a whopping $350 million in transactions.
As a result, says Laycock, the Alexan's price is more comparable to the Bellevue submarket than its own, where apartment sales typically range between $40,000 per unit and $80,000 per unit. The La Chateau in South Bellevue sold for $188,095 per unit three years ago, says Laycock.
Laycock says Sobrato has dealt for a number of properties up and down the West Coast from Trammel Crow Residential (through Doug Daley of the company's construction and development branch in San Mateo, Calif.). The Alexan is the second two Washington properties Sobrato has acquired from TCR, the first being the Lions Gate in downtown Redmond. GlobeSt.com was unable to reach Daley by deadline to obtain his comment on the sales.
When asked if a typical buyer (free from the 1031 tax pressures bearing on Sobrato) would have offered as fat of a price for the Alexan, Laycock says, "Not likely." But, Sobrato is facing a market where Laycock says owners are holding their properties because they know they would be penalized by selling at a time when rent concessions are commonplace and vacancies are high. So, with buying opportunities being few and far between, a hefty purchase price becomes a palatable alternative to the Tax Man reaching deep into the pocket of a cash-laden 1031 buyer.
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