Seattle-based Security Properties just spend $78.7 million to acquire The Heights at Bear Creek, a 226-unit apartment complex located at 17771 NE 90th St. in Redmond last week, according to public records. The sale comes to approximately $348,230 per unit. The purchase was done in partnership with insurer Cigna. Security Properties confirmed this, but they would not disclose the level of equity on the transaction that Cigna provided.
The seller was the Board of the State Teachers Retirement System of Ohio, which had owned the property since 1998. 10 units are available for rent at the complex as of this writing, bringing the occupancy of the property to nearly 96 percent.
We like the A locations, especially on the Eastside, beause the product cannot be replicated
Security Properties is a well-established national player in the multifamily business. Over the last four decades the firm had acquired or developed over 72,300 residential units exceeding $4.2 billion over 490 assets in 29 states across the country.
The company is a strong beliver in the Redmond market long-term with the light rail station coming in the future, expanding labor opporutnities, and it sees this type of product appealing to Eastside style of living. “We like the A locations, especially on the Eastside, beause the product cannot be replicated,” said Davis Vaughn, director at Security Properties. “We love that [the location] had 9-foot ceilings, which is rare for this vintage of property. Usually we see 8-foot ceilings.”
Security Properties plans extensive renovations of the asset both inside and outside. Vaughn would not confirm the level of investment, but he stated that they would be significant and include high-end finished in all units, as well.
Most recently, Security Properties in partnership with The Admiral Capital Group sold the 304-unit Waters Edge Apartments in Kent to San Francisco-based Jackson Square Properties for $56.5 million.
Redmond had a streak of recent multi-family sales recently. The 177-unit Milehouse apartment complex was sold by Foster City, CA-based Legacy Partners to Highlands Ranch, CO-based UDR, which paid $68,454,010, or roughly 387,000 per unit.
Redmond is experiencing one of the tightest apartment rental rates in the region. “The current vacancy for apartments in that market are 3.5 to 4 percent. On a year-to-year basis over the past 12 months, rental rate growth for apartments has been 5 to 6 percent. We are starting to see this level off a little bit,” said Kerry Nicholson, a senior managing director with Legacy.
Earlier this summer, Fairfield Residential LLC purchased four parcels totaling 1.7-acres, in downtown Redmond near Microsoft’s headquarters, for $6.2 million. The San Diego-based developer plans to build a six-story 360-unit mixed-use multifamily community on the site called Bear Creek, and anticipates that it will be completed by early 2019, according to a press release issued by ARA, A Newmark Company in Seattle.
Bear Creek is expected to promote the acceleration of transforming downtown Redmond into a vibrant, urban center where mixed-used residential and commercial developments are available near the city’s high-tech hub that has been created by Microsoft and orbiting companies. According to the City of Redmond, the downtown community currently provides more than 10,000 jobs for its 6,000 residents.
Redmond’s city center is believed to be on track to double its population by 2030 once the additional public transit is available. Plans to extend Sound Transit 3’s Eastside Light Rail from Redmond Technology Center into downtown includes a proposed station within a few blocks of Bear Creek Parkway, according to ARA Newmark.
In Redmond, nearly 900 apartments are set for completion in 2016, with another 191 units in 2017 and 1,513 in 2018, according to a report by Dupre + Scott Apartment Advisors. The average rental rate in the Eastside is $1,716, or $1.75 per square foot. There are 278 residential buildings that provide 41,656, of these only 3.5 percent are vacant, says the report.