As vacancy of Seattle apartments continues to decline, interest for apartment buildings grows among investors looking to place their funds in one of the properties available for sale in the region. Just as the interest has grown, so too has the pace of sales. This week saw another transaction occur in Seattle, this time, The Maggie Apartments in the city’s Magnolia neighborhood. The 50-unit complex sold for $14,565,000 on August 16th, or $291,300 per unit.
The seller of the property was an entity associated with the Worden family. The Wordens have owned the property since May of 2013, when the apartment complex was purchased for $9,290,000. The present buyer is Seattle-based Cadence Capital, which invests in and manages apartment properties across the city of Seattle.
According to Chris Garvin, principal and founder of Cadence, the company looks to invest in apartment, mixed-use and ground-up opportunities. It presently has around $160 million in assets and likes to invest in deals between $6 million and $20 million. The investment in The Maggie was done with a domestic equity partner whom Garvin was unable to disclose. The goal for Cadence is to add value to the property and likely sell it in a period of three to five years.
The Maggie is located at 3539 27th Place W. It is in the part of Magnolia that has a number of other multifamily properties, such as the Magnolia Manor and Magnolia Vista. The property is next Magnolia Manor Park and in close proximity to Salmon Bay.
The property was formerly known as Hillcrest Apartments, and offers a combination of one- and two-bedroom apartments. Based on information from apartments.com, there are no units available for rent. The property was developed in 1969 and features laundry services, a pool and fitness center.
According to the new owners, they are planning to add another three-story structure in the parking lot between the two existing buildings. The design is contemplating three-bedroom flats or townhouses, and Cadence is hoping to kick off construction in early 2018 with completion expected around early 2019.
“We like the neighborhood, there is no inventory in Queen Anne, and the neighborhood has some really good public schools, which can be a challenge in Seattle,” said Garvin. This is why Cadence is focusing on families as renters, with apartments ranging from 1,100 to 1,300 square feet in size. After investing a approximately $20,000 to $30,000 per unit on upgrades, it plans to charge market rate rents in the low $3,000 per month level.
The city of Seattle is expected to add around 13,600 units to its inventory over the next two years. According to a recent, second quarter of 2017 Apartment Insights report, there are 23,572 units under construction in King and Snohomish counties, and nearly 60 percent of that number in Seattle alone. The impact of those units on the market will result in easing some of the current pressure, however rents in King and Snohomish counties have increased to $2.01 per square foot, which is a 4.6 percent increase over the first quarter and 7.6 percent increase over the second quarter of 2016.