For the second time a former Reynolds American building is slated to be redeveloped into apartments, and it’s being done by the same company that redeveloped the first. From an article in the Winston-Salem Journal:
Plans for Whitaker Park in Winston-Salem include 314 apartments or lofts, a hotel and retail space, the Whitaker Park Development Authority Inc. announced this morning…
The apartments will be the second renovation of a former Reynolds property by developer Christopher Harrison, who was behind Plant 64 in the Wake Forest Innovation Quarter.
Creating the residential communities at Whitaker Park — in two buildings that were recently named historic sites — will be the first step in Harrison’s project, according to this morning’s announcement.
Probably the highest-profile project in Winston-Salem that isn’t in the Innovation Quarter is the repurposing of the old GMAC Insurance Building at 500 W. 5th Street. As part of that project, Grubb Properties is constructing a five-story mixed-use building that will include 224 apartments. Here are some of the details of their plans as described in an article in the Winston-Salem Journal:
Grubb has announced plans for a $48 million, five-story mixed-use facility that will stretch to the boundaries of Fourth and Poplar streets. It will contain a mini dog park and an adjacent “pocket park” off North Spruce Street.
Thomas said the plans include having five stories fronting on Fourth Street with retail on the first floor and four stories on the side adjacent to the 500 West Fifth Street tower...
Grubb has committed to making 5% of the apartments affordable to people making up to 90 percent of area median income, and 25 percent of the apartments having rents affordable by people making up to 110 percent of the median.
A New Jersey-based company currently owns ten shopping centers in the Piedmont Triad and has now entered the apartment market with the purchase of a Winston-Salem property. From the Triad Business Journal:
The Bedrin Organization, which owns 10 Triad shopping centers, has purchased Hilltop House Apartments in downtown Winston-Salem for $17.75 from retired Wachovia Corp. CEO and chairman L.M. “Bud” Baker in a deal that closed Monday…
The 169-unit community at 241 S. Cherry St., includes three buildings, and has an interesting history. The first building was built in 1962 as a Holiday Inn, later became a Best Western and was converted into 54 units in 2011 and 2012. The 50-room North Tower was built in 2012. The 65-unit South Tower was built in 2014 using pre-fabricated pod components.
“We are excited about where downtown Winston-Salem is going, with the arts and the culture that is there, with the Innovation Quarter,” said Garret Bedrin, who oversees acquisitions, leasing and investor relations for the New Jersey-based family company. “We want to make sure that there is a reasonably priced option for housing downtown.”
Yet, there have been six apartment-complex purchases in Forsyth over the past three months, all by out-of-region and out-of-state buyers.
“Investors are trying to find what few pockets of value there are left in the apartment market,” said Mark Vitner, a senior economist for Wells Fargo Securities.
“Prices have been bid up so much in larger markets, such as Charlotte, Raleigh and Nashville, that investors are increasingly looking to markets that have been overlooked and show great potential for growth.
“Winston-Salem and Greensboro are at the top of the list of overlooked markets.”
If you’re wondering what the price points were for the transactions, we did a little “back of the napkin” calculating using the information from the article and some data we have in our membership files and found the following;
Those 15 communities have a total of 2,349 units and the combined total of sales prices was $136,640,000, or $58,169 per unit.
RealPage released its rent report for the first quarter of 2019 which showed that the Triad had the fourth highest increase in the country. From an article in the Triad Business Journal:
Rent prices in the Greensboro/Winston-Salem metro area saw a 5.2 percent increase in the first quarter, with an average rent price of $830.
Greensboro/Winston-Salem ranked No. 4 in rent price increase among large metros, according to a first quarter apartment market report by RealPage Inc. (NASDAQ: RP). Phoenix, Arizona (up 8 percent), nabbed the top spot, followed by Las Vegas, Nevada (up 7.9 percent), and Atlanta, Georgia (up 5.3 percent). Charlotte ranked No. 11, with a 4 percent increase in rent prices.
Greensboro/Winston-Salem outpaced the national average, with U.S. apartment rents increasing by about 3.2 percent on an annual basis.
The recent sale of Towergate Apartments continues a trend of apartment purchases by companies from outside the region. From the Winston-Salem Journal:
Another Forsyth County apartment complex has been sold to an out-of-region buyer, this time Towergate Apartments in Winston-Salem for $10.94 million.
The buyer is Ginkgo Towergate LLC of Charlotte, and the seller is Towergate Associates LLC of Winston-Salem, according to a Forsyth County Register of Deeds filing Tuesday. The deal closed Tuesday….
The complex was built in 1985 and has 259 units within 25 buildings on 14.65 acres.
The sale is the latest of a recent spree of apartment complex purchases in the county…
Other recent apartment complex sales include: the 209-unit Carolina Woods in Winston-Salem for $11.5 million; 213-unit Loxley Chase in Winston-Salem selling for $16.25 million; 234-unit Morgan Place in Clemmons for $14.3 million; 204-unit Twin City Townhomes in Winston-Salem for $10.15 million; 144-unit Salem Crest in Winston-Salem for $7.5 million; 96-unit Woodlawn in Winston-Salem for $3.5 million; and the 49-unit apartment complex at 1976 Maryland Ave. in Winston-Salem for $1.45 million.
Representatives from NCDOT met with PTAA members in Winston-Salem to provide them with information about the closure of Business 40 for construction. While work on the project began last year, the closure of all lanes of traffic between Peters Creek Parkway on the west, and US 52 on the east, isn’t expected until Fall of 2018.
At that point, the major access points to downtown Winston-Salem will include:
From the east:
MLK Jr. Blvd exit off of Business 40 east of US 52
US 52 north to MLK Jr. Blvd or Liberty St
US 52 south to Research Parkway
From the west:
Peters Creek Parkway
Main Street north from Silas Creek Parkway
Academy from Peters Creek Parkway
NCDOT’s representatives were able to answer questions from attendees about the anticipated impact the construction will have on downtown businesses and residents; address concerns about whether the project will be completed on time; advise them on how to educate their prospects and residents about the project.
Since the great recession the primary residential real estate story has been the conversion of, well, everything to apartments. Historic buildings, existing commercial, condos, etc. We have not, however, seen any apartments converted to condos over the last 10 years, but that might be getting ready to change.
The Triad Business Journal reported that the Oak Street Lofts apartments in Winston-Salem will be converted to condos as existing leases begin to expire. From the story:
Bloodworth told Triad Business Journal that all current leases would be honored, and the units would be upfitted and sold as the leases expire.
But simple economics also points to an emerging cost-of-housing dichotomy that has traditionally been the undoing of the apartment operator: Rents are going up, and condo prices are coming down. If the cyclical nature of multifamily construction proves out, the endgame of that dichotomy means renters will slowly leave apartments to purchase condo units, and builders and investors will chase them down, attempting to convert rental buildings into condos along the way.
Interestingly, the article, which was written just as the apartment industry was entering into its historic growth period, accurately predicted that a trend towards condo conversion wasn’t likely to happen in the near future. Seven years later, with the cost of ownership solidly below the cost of renting, we might finally see the chilling of the apartment market. But, given the fact that the apartment boom has consistently defied historic precedents over the last seven years that’s not a sure thing at all.
According to a report from Marcus & Millichap, rents in the Triad have risen over the past four quarters thanks in part to investors looking for fertile territory after the Charlotte and Raleigh markets became a bit saturated. From the Triad Business Journal:
Rent for apartments increased 7.7 percent in the improving Triad market over the past four quarters, according to a Third Quarter 2017 report released by Marcus & Millichap (NYSE: MMI), a California-based, commercial real estate firm that provides research and advisory services in the U.S. and Canada.
The effective rent — the remaining cash after paying operating expenses — for landlords in the market was up 8.3 percent to $811. The vacancy rate dropped from nearly 6 percent to 4.5 percent over the past year.
By comparison, effective rents in Charlotte averaged $1,090 and in Raleigh they averaged $1,109
Much of Winston-Salem’s downtown apartment development has been concentrated near the Innovation Quarter and the central downtown area, with the notable exception of the Link Apartments Brookstown, which is across the street from BB&T Ballpark on the west side of downtown. That’s about to change with the addition of West End Station, which should deliver 229 apartment units to Winston-Salem’s West End within 24 months. From an article in the Winston-Salem Journal:
The $35 million development will provide 229 apartments in a block that’s close to both the center of downtown and the BB&T Ballpark, said Porter Jones, the president of DPJ Residential, a Charlotte-based developer doing its first project in Winston-Salem…
DPJ Residential and Chaucer Creek Capital of Raleigh are going 50/50 on the development. Chaucer Creek Capital owns the Gallery Lofts apartment community in downtown Winston-Salem, but the West End Station is the first development here for DPJ Residential…
Jones said West End Station will have a saltwater swimming pool and a fitness center, a two-story clubhouse with an outdoor terrace and gas grills, and two elevated courtyards above the parking deck on the lower floor of the building that faces Brookstown Avenue. In all, there will be 300 parking spaces.
Offering a mix of one- and two-bedroom apartments, the development will have rent ranges from $1,200 to $1,300 per month for the one-bedroom units, Jones said, to $1,600 to $1,650 for the two-bedroom units.