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12C — September 25 - October 15, 2015 — Fall Preview — M id A tlantic
Real Estate Journal
By Ken Wellar, Rittenhouse Realty Advisors A record setting year for apartment sales in Philadelphia P ennsylvania M ulti -F amily S ales
T
he Philadelphia real estatemarket has seen a record setting year
summer alone, three ma- jor downtown Philadelphia apartment buildings traded
per foot is the new norm. Another unique contributor to this market is the fact that
generated a great amount of interest with over 50 personal tours and about 20 offers to purchase. The property closed in early September for $42 million at a 4.1% cap rate on trailing numbers. Throughout our marketing process for Hill House, we saw interest from institution- al investors, international pension funds, and investors across the country including Los Angeles, Washington, DC and New York. Just five years ago, some major institu- tions would not even look at Philadelphia, but the outlook of those types of investors has changed and they now want to have a presence within the Philadelphia market. This is in part due to the growth of the rental pool, as Philadelphia’s population has increased for the 8th year in a row according to a recent census. This is also due to the high rents being achieved across the Philadelphia MSA. University City, home to University of Pennsylvania, Drexel University and Uni- versity of the Sciences, among others, is a Philadelphia market where there has been a significant increase in activ- ity. In the past, this has been a low activity market. This year, multiple owners who have held their buildings for 30 plus years have sold their properties. Several more ma- jor transactions are expected to take place in the Univer- sity City market before the year’s end. The neighborhood is buzzing with new construc- tion, from smaller projects of 22 units up to a 276 unit luxury building being mar- keted to graduate students and young professionals. The diverse market is made up of developers who are looking to develop and hold and put permanent financing on their property, as well as merchant developers looking to sell once they achieve full occupancy. Lastly, the fact that inter- est rates remain at historic lows certainly contributed to this record year of sales. If we continue to see low interest rates as well as job and rental pool growth, the future of apartment sales is optimistic and Philadelphia will remain a desirable market for outside investors. Ken Wellar is a manag- ing partner at Rittenhouse Realty Advisors. n
entity for decades. Owners who would typically refinance are now looking to sell in- stead. A great example of this is the Hill House Apartments located in the affluent neigh- borhood of Chestnut Hill, Philadelphia. This 188 unit premier high-rise apartment complex was recently sold by our team. The property was family owned since it was constructed in 1972. Since the property had not changed hands in over 40 years, it was considered a “Value-Add B” apartment building in an “A” market. Thus, the property
f o r apar t - ment build- i ng s a l e s . The high ac- tivity in the current mar- ket is due to several key influences. One contrib-
“If we continue to see low interest rates as well as job and rental pool growth, the future of apartment sales is optimistic and Phila- delphia will remain a desirable market for outside investors.”
at just below or over $500,000 per unit. This pricing is being driven by the high-occupancy, brand new class “A” apart- ment buildings achieving rents at over $3.00 per foot. In the past, achieving $2.00 per foot was considered suc- cessful. Today, reaching $3.00
owners who have held their properties for generations are now selling to take advan- tage of the high prices being achieved in transactions. Philadelphia has a number of apartment buildings that have been owned and con- trolled by the same family or
Ken Wellar
uting factor is that the surge of high-end new construction apartment buildings is at- tracting institutional capital interest to Philadelphia. This
JUST SOLD
Hill House - 188 Units Philadelphia, PA
The Lofts at 620 Corson - 31 Units Norristown, PA
Tyler Arms - 29 Units Morrisville, PA
Corinthian Apartments - 19 Units Philadelphia, PA
Rutledge Court - 23 Units Morton, PA
Corey Lonberger, Managing Partner corey@rittenhouserealty.com
Mark Duszak, Director mark@rittenhouserealty.com
KenWellar, Managing Partner ken@rittenhouserealty.com
RCA Sources Financing for the Full Range of Commercial Real Estate Asset Types: Retail, Office, Industrial, Healthcare, Hospitality, Multi-Family, Development, Special Purpose, Senior Apartments, Student Apartments, Mixed-Use & More!
George Johnson, President & CEO george@rittenhousecapital.com
Joe Hanuscin, Sr. Client Manager joe@rittenhousecapital.com
For information visit www.RittenhouseRealty.com or call (215) 454-2852
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