Equity Residential this week paid $48.86 million for the new Notch Apartments in suburban Newcastle, according to public records.
It’s an unusual move for Equity Residential in the Puget Sound region, where many of its 38 properties are in downtown Seattle. Goodman Real Estate of Seattle sold the 158-unit mid-rise development at 13800 Golf Club Road.
More and more multifamily investors want to balance their urban Seattle holdings with assets in suburban areas, especially on the Eastside, said David Sorensen, senior director at Berkadia, which brokered the off-market deal.
“For many larger investors it’s more about diversification than changing their overarching investment strategies,” Sorensen said. “Some buyers have expressed some trepidation about acquiring more units in the core of Seattle due to potential changes in renter behavior during and after the pandemic, but most are still bullish on core assets in the long term.”
Goodman CEO George Petrie said the company sold the asset to redeploy capital. Public records show that Goodman paid $4 million for the nearly 3.8-acre site in 2015 before developing it.
The investment market is finding its footing in Covid-19 era, according to Sorensen.
“At the beginning of the pandemic I would say, yes, there was definitely a wait-and-see approach from almost everyone on both (buying and selling) sides,” he said.
He added that many buyers initially wanted some sort of discount to pre-Covid pricing and not many deals were getting done, but as time went on and interest rates kept decreasing, some buyers began to get more aggressive in their assumptions and more transactions occurred.
“There is still a tremendous amount of capital searching for multifamily deals in the Seattle area, so buyer demand is unlikely to dissipate anytime soon, assuming current trends continue,” Sorensen said.
He declined to say how many of the 158 units have been leased.
Rents at the Notch range from $1,545 for a 391-square-foot studio to $2,550 for a two-bedroom, two-bath unit that measures 989 square feet, according to the property’s website.
One-bedrooms start at $1,635 for a 515-square-foot unit and go up to $2,020 for a 668-square-foot apartment.
Equity representatives were not immediately available Friday.
In Equity’s West Coast portfolio, Seattle delivered the strongest revenue results during the second quarter, company Executive Vice President and Chief Operating Officer Michael L. Manelis said during the July 29 earnings call.
He added the Puget Sound region portfolio was 95.3% occupied, and that overall revenue performance has “been very consistent since early April, although pricing decelerated slightly through what normally is the growth period of peak leasing season.”