(Carl Cronan is editor of Real Estate Florida.)
CLEARWATER, FL-Apartment investors appear to be stepping up their activity in the Tampa Bay market lately, with transactions going to closing more quickly and the gap narrowing between prices offered and sought for properties, say local multifamily brokers. They say some buyers are racing toward the end of this calendar year to avoid higher capital gains taxes expected in either 2009 or 2010.
"We are starting to see the market pick back up," John Burpee, president of NAI Tampa Bay in Clearwater, tells GlobeSt.com. "There is a big push among owners that if they are in the mindset to sell, they want to be able to close in 2008."
One such example of a quick closing is the 184-unit Longbranch Apartments in Clearwater, which was acquired for $7 million or $38,000 per unit by private investment firm Wisco 1 LLC. Burpee represented the buyer while John Stone of Colliers Arnold worked with the seller, Denver-based New South Properties.
According to Burpee, NAI represented the same buyer in the sale of a 90-unit property and had cash available to close quickly, while at the same time the seller had also contacted his firm to discuss market conditions and the possibility of listing Longbranch. "One conversation led to another," he says, "and within a matter of 48 hours we had a meeting of the parties and contract in place for the sale of the property three days later."
Longbranch's new owner plans a major repositioning and rehabilitation of the complex over the coming year, at a cost of more than $1 million, Burpee says. The apartments were 30% vacant as of the Dec. 19 closing date, he says.
Although apartment buyers and sellers are more willing to come to terms on deals lately, Burpee notes that a combination of tighter credit and the upcoming long Christmas weekend are making transactions difficult lately. "We're kind of at the mercy of the banks because of the holiday season," he says.
Yet that doesn't appear to have put the brakes on any deals this month. Besides the Longbranch deal, NAI also closed last week on the $5.1-million sale of the 120-unit Regency Square Apartments in Tampa. The $42,000-per unit price was 35% below the seller's asking price.
Even though apartment transactions in the Tampa Bay market have declined over the past two years, in line with a steep falloff in condominium conversions, the pace of deals is expected to tick up again as the rental market stabilizes, according to Marcus & Millichap. The commercial real estate investment firm notes that the local median price for apartment sales was $64,000 per unit through the third quarter, with cap rates in the mid-7% range.
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.
