Real Estate Insider: Detroit’s very first high-rise apartment building for sale – again
Over a century ago, when it opened, the Pasadena Apartments on East Jefferson Avenue were the tallest residential building in the city.
Although these days he is a long way from holding that title, someone else might hold the building title soon.
Last month, the 11-story building and its 170 apartments at 2170 E. Jefferson Ave. hit the market for an undisclosed price.
While this number is not made public, we can make an educated guess about the building’s value by doing a bit of reverse engineering.
This can be accomplished by dividing two digits which are disclosed in an offering memorandum by Detroit-based listing broker O’Connor Real Estate – net operating income and cap rate, or cap.
With an NOI of about $ 1.14 million and a cap rate of 6 percent, that puts the value at about $ 19 million, or about $ 111,900 per unit.
This is at least the second time in recent years that the building has been put up for sale; in 2016, it was listed for $ 11.9 million but was never sold.
The building, built in the early 1900s, has 55 studios with an average area of 500 square feet and rents for $ 800; 101 one-bedroom units for rent for $ 1,000 per month, or $ 1.42 per square foot for 700 square feet, on average; and 14 two-bedroom units renting for $ 1,200 per month, or about $ 1.33 per square foot in 900-square-foot units, according to the most recent MO.
I asked about the sizing gap that was reported five years ago when it hit the market, but didn’t get a detailed answer.
At the time, the owner said one-bedroom apartments ranged from 550 to 650 square feet and both bedrooms ranged from 650 to 750 square feet. Rents have also increased considerably during this period.
James Tumey, the broker on the list – both in 2016 and now – says the property has renovated the building since it took over over a decade ago, but there is still more “meat. on the bones “, which means that a buyer could put more money into the building and then increase the rents.
The Renaissance-style building – owned by an entity called Pasadena Investments LLC, which is registered in the Scot Turnbull name of Cynex Enterprises Inc. in Southfield – was designed by Mortimer L. Smith & Sons and added to the National Register of Historic Places in 1985. Today we know Mortimer L. Smith & Sons as SmithGroup JJR.
Cynex bought it in 2009 for $ 2 million, according to CoStar Group Inc., a real estate information service based in Washington, DC.
Tumey said in 2016 that even though the building was almost fully occupied when Turnbull bought it, only 30% of tenants were paying rent because the rest were living there without a lease.
On Thursday morning, Tumey also noted the building’s proximity to the new Meijer Inc. small-format grocery store called Rivertown Market, as well as the place where Dan Gilbert spent as much as $ 28.5 million to buy offices and parking spaces, as well as land suitable for conversion.