Chicago-based Equity Residential continues to grow its presence in Capitol Hill, as it purchased a second property last week. The Packard Building, a 61-unit apartment building located at 1530 Twelfth Avenue, on the corner of Twelfth and Pine in the Pike Pine Triangle neighborhood, sold for $25.8 million, or $422,950 per unit.
Originally built in 1911, the building went through a renovation in 2010 that added three new floors of housing to the existing two-story historic structure, totaling 80,000 square feet. The renovation preserved the original façade of the Packard showroom to ensure architectural and historical continuity for the neighborhood, during a time when Capitol Hill was referred to as Auto Row. Capitol Hill continues to feature buildings from the early 1900s, and the neighborhood maintains its historic charm.
After owning the building for over ten years, investor Dan Ederer went to Maria Barrientos in 2006 with an idea of redeveloping the building into housing. Ederer remained as the property owner, while Barrientos took over as the managing partner. “When we redeveloped the building we thought it was going to be a long-term haul, that was our intention,” said Barrientos.
However, redeveloping the old building proved to include a few obstacles. “During construction, we were constrained to the building footprint,” said Barrientos. “Most of our units are fairly large compared to what’s been built in the last six years. In order to stay competitive with all the brand new product, we realized that we were going to have to spend an upwards of a million dollars if we wanted to update all of the finishes.” After careful consideration, Barrientos contacted her local colleagues at Equity Residential, who were actively looking to acquire another property in the area.
Founded in 1969, Equity Residential is a publicly traded real estate investment trust. As of January 2016, the company has owned or had investments in 316 properties, consisting of 85,391 apartments in Boston, New York, Washington, Seattle, San Francisco and southern California. Equity Residential was not available for comment.
According to Kidder Mathews Fourth Quarter 2015 Seattle Apartment Market Report, the regional vacancy rate stood at 3.5 percent at the end of the year, an encouraging result considering the number of new units that opened in the interim. A total of 11,146 units were completed regionally in 2015, a 42 percent increase over 2014. The 2016 new unit count is looking at 11,992 units, almost all of that under construction at this time. Deliveries are set to jump up significantly in 2017 another 16,052 units, and 15,305 in 2018.
The regional apartment market appears to be on a plateau at the top of this cycle, according to the same report. The general long-term outlook for the Puget Sound region continues to be better than most markets nationwide, and it is expected that the peak may be extended if interest rates remain low. There is a significant amount of institutional capital targeting the Seattle market, in addition to a traditionally strong local buyer contingent. No major changes in these trends are anticipated until the next notable increase in interest rates.
Image courtesy of Studio 216