West End Tampa Sells First Project

TAMPA, FL - In Hillsborough County's second largest deal of the year, a residential real estate investment trust paid $43.7 million for an upscale apartment complex nearing completion in West End Tampa. Colorado-based UDR Inc. closed Tuesday on Victory Lofts at West End, part of the first phase of Morin Development Group's million-square-foot urban project.

The transfer of ownership from Cleveland-based Zaremba Group to UDR was arranged prior to development, said Nicholas Husak, regional director of development for Zaremba. Part of the 249-unit Victory Lofts will open in October, Husak said. Construction on the remaining units should be complete in the first quarter of 2009.

Morin Development Group is master developer of the infill project on eight city blocks about a mile-and-a-half west of downtown Tampa. It's expected to include 550 apartments, 60 town homes, 340 condominiums and 25,000 square feet dedicated to local retailers, restaurants and office space.

The sale price for Vintage Lofts is $175,000 a unit, a price NAI Tampa Bay's T. Sean Lance said was hefty, especially since there is no certificate of occupancy issued for the project yet, and it's vacant. "It's finishing up in an area that is still unproven and very pioneering," Lance said. "I'd be curious to see how the new buyer underwrote the deal and what their anticipated absorption is."

Vintage Lofts was said to have a target rental price of up to $1.70 a square foot, prices not seen outside of the downtown Tampa enclave Harbour Island, Lance said. Even other higher end rental projects such as Seaport at Channelside are offering rents between $1.45 and $1.50 a square foot, prices that might go down if The Place at Channelside turns its remaining 171 units into rental.

The location of Vintage Lofts on West Cypress Street and North Rome Avenue borders two very different rental submarkets. Real Data Apartment Market Research, which provides seasonal reports on the Tampa multifamily market, places Vintage Lofts in the Tampa South submarket where rents are $1.19 a square foot, well above the regional average of 91.1 cents a square foot, and where there is just a 6.5 percent vacancy rate.

However, Vintage Lofts closely borders the Tampa Central submarket, where rents average 89 cents a square foot and vacancy is nearly 11 percent, well above the regional average of 9 percent. "This is an area that is a little more economically challenged," Lance said. So far, multifamily complex sales in Hillsborough have sold for an average of $70,000 per unit, 60 percent below Vintage Lofts' sale price, Lance said.

At West End, Morin is presently developing three-story town homes across the street from Victory Lofts. Those homes should be complete in the fourth quarter of next year. Ken Morin, principal of the development company, said a model will open in late September and he has pre-sold some town homes.

In addition, Morin plans to break ground within three to four months on a $60 million, 296-unit apartment complex called Logan Park. That development should be complete in the first quarter of 2010. Morin expects the residential market to improve by the time Logan Park is complete. Then development of residences will begin in earnest.

In Hillsborough's biggest investment sale this year, LaSalle Investment Management of Chicago purchased Campus Lodge on Livingston Avenue for $45 million, or $144,000 a unit. Zaremba will manage and lease Victory Lofts for UDR (NYSE: UDR), which is based in Highlands Ranch, Colo.