Series of Off-Market Sales Nets Full Block for 227-Unit Mid-Rise

Five land sales and one property exchange from four sellers have closed in the past two weeks. The last deed flipped two days ago: the 113-unit Reagan Plaza at 2602 Reagan St. The land assembly has cost the developer "north of $4 million," Armand Charbonneau, vice president in Dallas for the Houston-based Transwestern Commercial Services Inc., tells GlobeSt.com. "The seller got significantly more than it's worth as apartments yet the buyer got development land for significantly less than they would have had to pay in that area." The last seller was Oakwood Properties of Dallas, which bought the class C apartment building in 1998.

Nicholas Chapman, an Alliance Communities' development partner in Texas, says construction will start in mid-June on the four-story Broadstone Oak Lawn project and wrap up in September 2006. According to Charbonneau, the developer has retained Steinberg Design Collaborative LLP of Houston to craft the high-end development. "There will be a dramatic increase in prices in that area of Oak Lawn when this project goes up," he predicts. Based on other Broadstone projects, the development tab most likely will exceed $25 million.

Alliance brought the Broadstone brand to Texas about three years ago, starting with the 223-unit Uptown Lofts at 3363 McCue Rd. in Houston. Since then, Houston has landed two more Broadstones and one's on the way in nearby Sugar Land while San Antonio's north central submarket has two developments by the Texas affiliate of the Phoenix-based Alliance Residential Co. Uptown Lofts, which is about the same size as the mid-rise planned for Oak Lawn, has one- and two-bedroom units, ranging from 659 sf to 1,200 sf and rents of $975 to $1,540 per month. Alliance owns one multifamily asset in Dallas, but it's not a Broadstone brand.

Charbonneau says the next move is to start clearing the land. Reagan Plaza and two single-family houses will come down in a few days to make way for the mid-rise and parking garage. The block is bordered by Reagan, Shelby, Brown and Fairmount streets.

Charbonneau and partner, Mark Freeman, started to quietly court developers in May 2004 with Oakwood's apartment building. "The only way to get the price this owner wanted was to go after developers," Charbonneau says. Alliance, though, needed more than one tract. "That was a big coup to get a whole block," he says, adding others tried to get in on the play as the plan took shape. "Everyone wanted to get a piece of that."