(To read more on the multifamily market, click here.)
MINNEAPOLIS-Private capital continues to compete aggressively for Twin Cities multifamily properties, especially for well-located assets under the radar of the institutional buyer, Keith Collins, a CB Richard Ellis vice president, tells GlobeSt.com. "Pricing remains aggressive for class A, and well-located class B and C properties in the Twin Cities," he adds. "Cap rates remain very low for these property types as well."
Collins recently marketed and sold two Twin Cities properties--the 121-unit LaSalle Apartments in Minneapolis and the 336-unit Summit Park Apartments in Burnsville. Bloomington-based TE Miller Development purchased LaSalle Apartments from Englewood, CO-based Archstone-Smith for $11.55 million, or about $95,000 per unit. Summit Park Apartments was purchased by Parkridge, IL-based Town Management from New York-based Sentinel Real Estate Corp. for $21.7 million, or about $65,000 per unit.
Collins says that the new owners of LaSalle Apartments and Summit Park Apartments each were encouraged by ongoing and proposed developments near their properties. For TE Miller, that includes the new Minnesota Twins baseball stadium that's planned for a site near LaSalle Apartments. And for Town Management, it's the Heart of the City, a 54-acre mixed-use redevelopment in downtown Burnsville.
Originally built as the Downtown YMCA in 1919, LaSalle Apartments was converted into an apartment building in 1994. Monthly rents for studio and one-bedroom apartments in the building range from $750 to $1,430. Collins says the building's occupancy is in the low 90s.
Built in 1987, the four-building Summit Park Apartments is located at 12501 Portland Ave. in Burnsville. Rents for the one- to three-bedroom units range from $715 to $1,100 per month. Collins says the complex's occupancy is in the middle 90s.
Collins says that the rental market in both Downtown Minneapolis and suburban Burnsville has experienced a "great deal" of improvement. Marcus & Millichap's third quarter Minneapolis apartment report says that a variety of factors, including employment growth, rising home prices, condo conversions and minimal new multifamily development, are adding up to a tighter rental market. The report projects a 5.6% vacancy for the end of 2006.
Led by the pension fund buyer, institutional interest in acquiring class A apartment properties in the Twin Cities remains strong, Collins says, adding that job growth, lack of new construction and the diverse local economy are some of the reasons behind the activity. Conversely, he says, REITs, such as Archstone-Smith, are currently selling their Twin Cities holdings as part of a strategy to focus on the coastal markets, where stronger growth is projected.
Collins says that another Archstone-Smith property--the 250-unit Symphony Place at 12th Street and Marquette Avenue in Downtown Minneapolis--is under contract for an undisclosed price. That sale is scheduled to close in the first quarter of 2007.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
