2. For-rent trumps for-sale
Developer Michael Malone knows Seattle’s Pike/Pine neighborhood well, having contributed to its preservation and revitalization for years. When Malone started his first new project, the Broadway Building, he knew rental housing would have to be part of the mix. “The ‘buy-build-bail’ mentality of condo development doesn’t appeal to me nor lend much support to the leadership of a community,” says Malone, the CEO of local firm Hunters Capital. “There is no question that rental demand is strong” in cities like Seattle.
One of the innovations Malone has incorporated into his project is that, in addition to 94 market-rate rental apartments, 28 units are offered for international students attending Seattle Central Community College. Both the student and market-rate apartments are 100% occupied, and all but one of the retail spaces are leased. The office space is 45% occupied.
“Well-located rental apartments are commanding the rent numbers,” says Chris Lessard, president and CEO of the Lessard Group, the Vienna, Va.-based architecture firm that designed the Meridian at Grosvenor Station. “Even in a soft economy, we’ve seen rental prices move up in the last six months.”
The Paradigm Cos. of Arlington, Va., developed and built the Meridian at Grosvenor Station, a 15-story building in North Bethesda, Md., with 300 upscale apartments, street-level retail, and underground parking. The original owner of the property envisioned condominiums, “but during the initial design process, the market changed rather rapidly and Paradigm became the owner, builder, and developer,” says Lessard. “Their product is typically rental.”
Clarke Ewart, president of Paradigm Construction, notes that strong job growth in the Washington, D.C., region is fueling apartment demand from young professionals. “When they first land in the city, they’re renting and figuring out what they want to do,” says Ewart. Delivered four months ahead of schedule and under budget, the Meridian is 94% occupied.