A resident of the Andover Richmond Apartments at the corner of Richmond and Graustark passes on word to Swamplot that a “midrise luxury style residence” is being planned for the 2.9-acre site near Graustark — after the courtyard-style apartments that have stood there for more than 50 years are demolished. Residents with month-to-month leases will be given 35 days’ notice to vacate, the resident reports. Those with time left on their leases will be dealt with individually and possibly given incentives to vacate before the end of next January. Swamplot reported the sale of the complex to an arm of REIT factory Behringer Harvard yesterday. According to the tipster, some residents have already been told that their homes will be torn down, so they can beat the expected “flood” of residents looking for similarly priced apartments in the area.
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Those might be hard to come by. Two-bedroom units in the apartments at 1301 Richmond averaged $825 a month, and 1-bedrooms went for $725 — well below the prices for newer properties in the area. The resident says the complex was “immaculately maintained.” Units included hardwood floors, dishwashers, and walk-in closets. The complex has 2 large courtyards, a pool, and a gated parking area.
- Previously on Swamplot: Changing of the Guard at a Castle Court Complex
Photos: Andover Richmond Apartments
Awww another nice, people-scaled project bites the dust.
The Heights has one and two bedrooms at these prices. But no longer Montrose, and probably never again..
It’s shameful how all these quaint little apartment complexes are being demolished to accommodate these gargantuan midrise apartment complexes. Pretty soon, Montrose will be out of reach for anyone who wants to live in the neighborhood without going broke. :-(
Scott,
As supply and demand meet, those new complexes will be coming down in price. Some will be well maintained and be the Castle Courts of the future.
Meanwhile, Cody gets to buy more properties and find more tenants being kicked out of these apartments…if the red tagger doesn’t stop him, :)
I don’t understand why developers in Houston don’t take advantage of these unique properties that could be brought up to date and made cool again. . .
There’s a great company in Dallas that is doing this – and with all the cool mid century modern complexes in Montrose, this could be so amazing. Why tear down when you can keep the ambience of the area and keep Montrose one-of-a-kind?
Check it out:
http://www.powerproperties.com/
Wonder how long it is before Ridgemont Square, which sits on a fairly huge parcel, goes under the wrecking ball.
The Richmont Square apartments are owned by the Menil Foundation. The Menil may tear it down at some point to expand their campus, but as far as I know, there are no plans (none that have been publicly announced, at least).
Maggie,
Simple answer to your question. At 2.9 acres of physical land, and a purchase price of X (let’s assume priced to the dirt, likely $50/foot) they are in this deal for $6MM dollars day one.
If they wanted to be in the business of renovating (This IS income producing property, not pride of ownership single family housing) and retaining the character of the original complex, look at the math…
assuming a coverage ratio of 1/1, and average unit @ 1000 square feet, that gives you 120 units and 120,000 to renovate maticulously.
Assuming you would have to put $20,000 into each unit to justify buying this deal, you’ve now got $6MM + $2.4MM in renovation dollars, plus the fact you’ve got to kick everybody out of their unit to renovate it, do the work, then relet the unit. So, that puts you at 1 year of ZERO revenue, and whatever associated costs there are there.
For the sake of argument, your all-in is $10MM. THEN, after you have painfully restored a garden complex to the delight of yourself (I promise you the neighborhood won’t come out and bring you a check for your efforts to retain transient renters for another 50 years), here is your reality:
1) you would need to jump rents from $800/month to $1200 or greater, lease them all, then sell at a benchmark cap rate exit for such a non-comforming product, and that’s assuming you get your investors interested in the capital and scope in the first place, rather than buiding a 2.5:1 ratio development against $50 dirt
2) you would need to find an exit partner with just as much interest in running this model as you did creating it. institutional buyers that are willing to overlook the latest TCC Alexan product to buy a risky retrofitted low coverage ratio multi family deal in a market that has very little inventory of trailblazing like product. what i’m saying is this won’t exist, so you’re stuck with cash flow now. So…
you have $10MM in it, and if you are the greatest level of execution here, you are 7 years of revenue before you are whole on your initial investment, and you have a huge chunk of change parked in it, with zero recap abilities. if i run a bank, i’m not cashing you out of that mistake.
I call BS that apartment properties can’t be rehabbed and still make $$. A great example is the apartment complex on Park Street@Maryland and another a few blocks to the west. Maybe McDuffie? Hazard? Brun? About five years ago both places were completely gutted and put back together fabulously upgraded. And the rents are reasonable.
@ Maggie. You’re $20,000 per unit figure is poppycock.. In the case of the demolition of 1301 Richmond… the complex is already done…and it’s been maintained to perfection…. The mature trees and lush flowered landscaping in the complex is 2nd to none…. This is just a case of gentrification… pure and simple…. Montrose and the Heights have character worth saving… it’s not all about money… as you suggest…. girl please……Next!
Pardon the misdirection above.. that comment was in response to HTX Rez… This is more than a spreadsheet… it’s about a neighborhood.. and people’s lives….
HTX Rez nailed it with one caveat. You can do a rolling renovation. Wait for people to move out and then renovate. I have seen that happen a number of times around town. But, it is more of a keeping up with the Jones’ renovation that is done when the $ to tear down and build new is not around.
Another thing: it’s not about if the financials work as an apartment complex (or work as an upgraded complex). It’s a question of what’s it worth to someone that has different plans.
My offer might come to $60/sf on the land to run it at a cap rate needed to have a bank lend (and good luck there). To a developer, they could pay $70/sf for the land to build new. At that price it doesn’t make sense for an apt buyer to run it. And if you’re a seller who you going to sell to?
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It’s not a spreadsheet it’s peoples lives but the person who owns the property has his life to think of and he’s going to sell to the highest bidder. What some of us would like to see done takes a back seat. If you listed your house and a home buyer offered $400k as a place they could live, and a developer offered $600k to knock it down, would you really feel the same way?
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I get out bid on property often when land value is so high that it’s punches price isn’t supported by the structure on top.
Cody, the more places knocked down means more potential renters for you too :)
Lost: true, but remember they’re ultimately (likely) putting something much larger in its place
What, Cody? If a developer offered me 200k more than an owner-occupier’s low ball offer… where do I sign? Is that a serious question?
I lived in this complex for a couple of years in the mid-90s. It was a nice little place in the middle of everything; not the best, but clean and affordable. Wish they’d do a rolling renovation like Old School suggested. One main thing I’d hope they’d do is greatly increase the sound insulation between units…I could hear my neighbors all the time, and vice versa. Sometimes it was amusing, sometimes not!
As a current (soon to be vacated, I hope) resident of Andover, I’m still unclear on the financial aspect of demolishing such a large complex and constructing an entirely new structure.
Given, rehabilitation would also be expensive, I’m confused about the perceived returns that this new midrise poses. I would think the time it would take to recoup the losses incurred by going through with such a large construction project would take a substantial time to overcome.
More than that, there is one other thing that troubles me that maybe some of the developers on this thread might clear up. How much does humanity and civic duty factor into these decisions. I could quickly assume that the dollar and cent logistics is enough for anything like this to get green-lit, but I would rest a little more easily knowing that someone along the line questioned the implications of suddenly forcing so many people to find new places to live. Especially considering that, for students like me and my room mate, springing this change so close to the beginning of the coming semester only makes finding a new place that much more impossible to find.
It might sound petty, but I hope someone somewhere feels at least a little guilty for the amount of hardship that has been dumped onto my lap.
It’s called greed.
Thisboy, the financial benefit of demolishing the complex is very clear but would take too long to explain thoroughly.
A developer’s sense of humanity and civic duty is fulfilled by knowing that he created many construction jobs, provided a quality residence to fill a demand and revitalized an area.
I feel for you because I know moving is a pain and can be expensive but you did sign a private contract allowing your landlord to cancel the lease on short notice.
Old apartments at 2000 North Blvd being demolished.
:( crap. Crap. Crap. This is my complex.
Just (Aug 22) got a notice to vacate by September 30th. Real nice of them since most of the residents are students.