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SEATTLE, WA-The 13-story Decatur apartment building on First Hill here will be converted to condominiums by the locally based Wysong Group. The development company acquired the 146-unit 1950s-era property earlier this month for $25.7 million or $176,027 per unit. A company source tells GlobeSt.com that planned pre-sale improvements will cost $4 million, pushing its per-unit cost basis over $200,000.
Located at 1105 Spring St., the Decatur was one of the first concrete and steel high-rise buildings in Seattle. It was designed by architect John Graham Jr., who also designed the Space Needle. Most of the upper-floor units have city, water and/or mountain views. The property is located within walking distance of major employers and mass transit.
There were more than 20 offers received for the property, listing broker Kenny Dudunakis of Hendricks & Partners tells GlobeSt.com. If the property were remaining an apartment property the first-year capitalization rate would be 4.25%, says Dudunakis, who marketed the property with fellow H&P broker David Young. The seller was a limited partnership based in Bellevue.
Wysong president Jeff Wysong says the units will hit the market "toward the end of the year" after the upgrades. The improvements will include new flooring and completely remodeled kitchens with stainless steel appliances. Electrical, plumbing and windows were upgraded by the previous owner, Dudunakis says.
Wysong says the units will be priced from the low $200,000s to the mid $300,000s, but he declined to estimate the expected sell-out value. The primarily one- and two-bedroom units range in size from 540 sf to 830 sf. Wysong says current Decatur residents will be offered an opportunity to purchase their apartment at a discount before sales are opened up to the general public.
Wysong Group specializes in converting apartment buildings. The company has participated in 12 projects since 1997. Recent projects include Saxony in Sammamish; Cooper Square in Greenwood; Windsor Court in Lower Queen Anne; and Mira in Kirkland.
In other area multifamily news, the 112-unit Breakwater Apartments in Des Moines, WA, changed hands for $6.9 million, which equates to $61,607 per unit and $88 per rentable sf. The new owner is Pacific Living Properties. The seller was Longwell Co. Occupancy was not immediately available.
Built in 1976, the garden-style property is not slated for conversion. The sole broker in the off-market transaction, Joe Levin of Colliers International, tells GlobeSt.com the sale price translates to year-one cap rate in the mid-5% range based on in-place numbers and that the new owner plans upgrades to the property as part of a value-add strategy. Rents at the property range from $0.85- to $1 per sf.
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