Two Pennsylvania-based companies recently bought a 226-unit apartment complex in North Austin, marking both companies’ first foray into the Austin market.
Korman Communities, a residential real estate company, bought the property with Verde Capital Corp, a private equity firm. Company representatives did not disclose the sale price, but Verde Capital President Jacob Reiter said they have invested $750 million across six projects with Korman Communities, including this one.
The companies bought the property from High Street Residential, a subsidiary of Trammell Crow, and Principal Real Estate Investors.
The property, called AVE Austin, is located at 7400 N. Lamar Blvd. It is a new complex and consists of mostly traditional, unfurnished apartments available for market rate. A portion of the units, however, are being turned into furnished short-term options for people traveling on business or visiting the city for extended periods of time.
According to Bradley Korman, co-CEO of Korman Communities, the average stay at their extended stay properties is 7.2 months. He said the company is trying to meet the needs of people who want more flexibility in their living situations.
“Apartment living, really, is one of the few industries that hasn’t really progressed,” Korman said. “It’s always 12 months, no furniture. We look at it and say that’s not how the world is right now. Why not give people more options?”
From an investment standpoint, the flexibility tends to yield more returns, Reiter said.
“The ability to take a portion of those units from multifamily to extended stay gives us that little bit of extra return, particularly with a partner that’s been in this business for 100 years,” Reiter said.
The units range in size from studio to three-bedroom. The complex has amenities including a pool, fitness center, rooftop lounge and at-home workspaces.
Korman Communities is a family-run enterprise out of the Philadelphia area. The company operates urban high rises and suburban multi-family properties throughout the U.S. Verde Capital invests nationally in multifamily, student housing, urban mixed use and other property types.
“We really focus our platform on high job growth, transit-oriented markets where people want to live and work,” Korman said. “Austin checks those boxes for us.”
He said the Austin market has been a target for years, due in part to the abundance of new apartment construction, particularly in the luxury category.
There are currently 57 apartment communities under construction in the Austin metro area, per ApartmentData.com. Interest in class A apartments, which are in the luxury category, has gone up considerably among renters, according to Cindi Reed, regional vice president of ApartmentData.com. Since the beginning of 2021, occupancy in Class A properties has gone up 6.5%.
“We’re getting an influx of new renters in our Class A products,” Reed said.
AVE Austin is classified as a class AA apartment building.
Reiter said Verde Capital looks particularly to invest in places with universities and tier-one hospitals. In addition, Austin’s notable job growth makes it a strong city for this sort of venture, he said.
Publication: Austin Business Journal