Large DC Apartment Property for Sale
Equity Residential is pitching a Washington apartment complex as a rare opportunity to acquire a large value-added property in a supply-constrained market.
The 625-unit building, at 3003 Van Ness Street NW, could draw bids of around $240 million, or $384,000/unit. The Chicago REIT has given the listing to CBRE.
Built in 1970, the property has undergone only minor upgrades over the years. While it is subject to rent control, investors are being told there is potential to increase revenue as units become vacant and are renovated.
The property is among only twelve in Washington with more than 600 units, and none of those have changed hands in the past four years, according to marketing materials. It’s in the Connecticut Avenue corridor, where development is rare and only 26 units are expected to be delivered through 2022.
The 10-story building has two wings, connected by a single-story lobby. Its studio, one-, and two-bedroom units are 96% occupied. The average unit size is 947 square feet, among the most spacious in the surrounding Van Ness submarket. Average rents are $2,167, or $2.29/sf. Amenities include an Olympic-size swimming pool, a fitness center, a lounge, a library, bike storage, reserved parking in an underground garage and Zipcars on site.
According to marketing materials, 29 apartments at 3003 Van Ness are currently occupied by long-term tenants at rents that are roughly $770 per unit lower than comparable units. The sales pitch is that as those units become vacant, rents will immediately increase by 20%. Bringing their rents in line with other units at the property would result in $276,200 of additional revenue per year.
Annual rent increases on occupied units are limited to 2% of existing rent plus the Consumer Price Index, under municipal rent-control regulations that apply to most properties built before 1975.
The Van Ness neighborhood has an affluent and well-educated resident base. For the population within a half-mile of the complex, the average annual household income is $170,000 and 90% have bachelor’s degrees or higher.
The property is one block from the Van Ness-UDC station on Metro’s Red Line, four stops north of downtown Washington and three stops south of Bethesda, Md.