Townhouse-Condo Project To Replace 28 Units

DALLAS-A local developer will scrape a 28-unit class C complex from a 19,936-sf tract of land and replace it with a townhouse-condo mix. It’s the latest in a string of similar moves in Oak Lawn, where buying, razing and rebuilding have become the norm.

Birchtree Apartments at 2734 Throckmorton St. never made it to a full-blown marketing. “It ended up going pretty quickly just by word of mouth,” Al Silva with Marcus & Millichap Real Estate Investment Services tells GlobeSt.com. He teamed with Marcus & Millichap colleague Kelly Sparkman to sell the property, which traded for close to the $960,000 ask.

Silva says the seller from Altadena, CA had the complex at 85% occupancy at sale time. The 28 efficiencies average 600 sf, with rents averaging $500 per month. The complex’s dynamics, though, are a moot point since the intent is to scrape and rebuild with a townhouse-condo project, according to Silva.

Silva says the local developer is finalizing his plan for a site that’s across the street from Phoenix-based Alliance Residential Co.’s development site and caddy-corner from another proposed project by another developer. “This whole area is going to be new product in 12 to 18 months,” he says.

The Birchtree sale was one of three class C complexes that Marcus & Millichap brokers closed in recent weeks. Other deals included the 82-unit Buckner Manor at 2722 Buckner Blvd. and 110-unit Autumn Brook and Winding Way apartments at 13259 Emily Rd. In both cases, buyers and sellers were private investors from Dallas/Fort Worth.

Buckner Manor was 85% leased at sale time, with the one-bedroom units averaging 560 sf. Its all bills-paid rent is $450 per month. Silva says the new owner, who met the $1.58-million ask, plans to transition it so that tenants pay their own utilities as a means to improve returns.

Autumn Brook and Winding Way, which were 95% leased, has one- and two-bedroom units from 485 sf to 975 sf. Rents go from $460 to $650 per month. The buyer has paid fairly close to the $3.68-million ask, Silva says. “It’s a good cash-on-cash return coming into the deal,” he adds, citing the play is opening with a 12% return. Marcus & Millichap’s Tommy Lovell partnered with Silva on the transaction.

“It just shows if you’ve got the right value-add or redevelopment or any angle like that, it’s still a very good opportunity to get a buyer,” Silva says, recognizing the market’s slowed, but not stopped for class C investment sales.