November 30, 2000
The area's biggest recent apartment building sales have taken place in Renton and South King County as investors chase wealthier renters moving there from the Eastside.
"The Renton area is seeing improved demographics because of high rents on the Eastside" that send some renters looking further south for something more affordable, said Jon Hallgrimson, an apartment broker with CB Richard Ellis who has put together some of the large Renton-area deals.
"You're seeing quite a few people commuting now on I-5 and I-405" from around Renton to work on the Eastside and in downtown Seattle, Hallgrimson said.
Investors respond by buying and selling. Some of those who have owned Renton-area apartment complexes now have gains in value that they can capture by selling. Prospective buyers, meanwhile, move in because they expect rents to keep rising, generating more increases in value.
The Fairwood area along Petrovitsky Road, southeast of Renton in unincorporated King County, has been particularly hot lately, King County property records show.
Hallgrimson and fellow CB Richard Ellis broker Frank Bosl expect to close a roughly $35 million sale next week of a 400-unit Petrovitsky Road complex called Carriages at Fairwood Downs, Hallgrimson said.
The seller is the Boston-based pension advisor AEW Capital Management. The buyer is another pension advisor, Hallgrimson said. The price would come in around $87,500 per unit.
Another pension advisor, UBS Brinson Realty Investments, set the Southend record last month by paying $112,500 per unit to Buchan Properties for the freshly built Springbrook Apartments on the south edge of Renton.
Bosl and CB Richard Ellis colleague Sharon Dicker represented Buchan in that deal.
Nearby at 14700 S.E. Petrovitsky Road, the 3-year-old Fairwood Pond apartment complex sold last week for $89,600 per unit, county property records show.
LaSalle Investment Advisors of Chicago paid Harbor Homes $17.5 million for the 194-apartment project built by Harbor in 1997.
"The Fairwood area has become a really nice pocket," said Hallgrimson, who represented Harbor Homes. "It's got a good golf course, nice homes, real strong demographics (meaning higher income earners), a nice neighborhood shopping center and good access to Bellevue." The area also has Petrovitsky Park and Lake Youngs.
In yet another recent Fairwood-area deal, Ed Springman's Bellevue-based Sherron & Associates paid $63,000 per unit for the 194-unit Fairwood Landing apartments on Southeast 177th Street.
The seller was the Denver-based real estate investment trust named Archstone Community Trust, one of the country's largest apartment REITs. Sherron & Associates paid $12.3 million. Broker Greg Laycock of Cushman & Wakefield negotiated for Archstone, which had recently remodeled the complex.
Last month, Laycock sold the nearby Pebble Cove apartments for Archstone for $78,125 per unit.
Archstone developed Pebble Cove in 1996. The complex totals 288 apartments and was sold to Lend Lease Real Estate Investments, a pension advisor, for $22.5 million.
"I think that everybody has realized some gains in the submarket because it's so tight (with low vacancies, and thus rising rents)," Laycock said. "It's just like with the stock market, you want to sell high."
In Archstone's case, "they're basically pruning their investment base in the Northwest to redeploy the capital in California and the Northeast," Laycock said.
Seattle-based apartment investor Mike Sauter, meanwhile, is zeroing in on the Southend. Sauter, principal of Jones & Murphy, last week closed on buying Avalon Westhaven on Southwest Holden Street near White Center for $12.5 million, King County property records show.
The seller was the California apartment REIT AvalonBay Communities. The complex totals 190 apartments, so the price equals $65,000 per unit.
Hallgrimson represented Jones & Murphy, which in August paid $32 million, or $69,289 per unit, for the 464-unit Glen Park apartments in Federal Way.
