Ahwatukee apartment complex sells for $70M

The 240-unit Mountain Park Ranch apartment complex at 44th Street and Ray Road, Ahwatukee, sold for just over $70 million. (vizzda.com)

A Chicago-based global real estate investment company has purchased the Mountain Park apartment complex in Ahwatukee for just over $70 million.

LaSalle Investment Management’s purchase of the 240-unit complex at 44th Street and Ray Road was announced last week by the deal’s facilitator, Institutional Property Advisors a division of Marcus & Millichap, which gave no mention of the sale price. Valley real estate tracker vizzda.com shows that the sale occurred Feb. 15 by SRGMF III Ray Road Phoenix LLC, which paid $54.25 million for the complex in 2020.

The sale reflects a continuing trend across the Valley. Over two dozen multifamily properties have flipped ownership at significantly higher prices within a few years of their previous sale, indicating high investor interest in apartment complexes at a time when average rental prices have soared.

Though that increase in rent has slowed significantly in recent months, various analysts say the rental market shows no sign of a major downturn, given the rising price of single-family homes.

Apartmentlist.com said last week, “Phoenix rent growth in 2023 is pacing below last year. Two months into the year, rents in Phoenix have fallen 0.6%. This is a slower rate of growth compared to what the city was experiencing at this point last year: from January to February 2022 rents had increased 0.5%.”

However, zumper.com, which also studies rent trends across the country, said last week: “Over the past month, the average rent for a studio apartment in Phoenix increased by 9% to $1,249. The average rent for a 1-bedroom apartment increased by 8% to $1,400, and the average rent for a 2-bedroom apartment increased by 4% to $1,675.”

Further indicating a steady demand for rental units, the Cromford Report, a leading analyst of the Valley’s housing market, reported late last year that more building permits for multifamily developments were issued by municipalities in the Phoenix metro region than for single-family homes.

In announcing the sale, Cliff David, IPA executive managing director also underscored the profitability of apartment complexes in the Valley.

“Ahwatukee Foothills Village demonstrates attractive demographics and consistently high single-family home prices that taken together, sustain the location’s reputation as one of the premier suburbs in Greater Phoenix,” he said.

“High barriers to entry have led to supply constraints in Ahwatukee for decades, marked by only two multifamily properties completed in the submarket over the last 20 years, solidifying the area as an exclusive location within Arizona.”

Steve Gebing, another IPA managing partner, said last year when IPA negotiated the sale of another Mountain Park Ranch complex – the 288-unit Mountainside – that “severe supply constraints and average single-family home values in Mountain Park Ranch that exceed $600,000, are driving incredibly strong multifamily economics.”

Vizzda reported that the Mountain Park Ranch complex, built in 1994, comprises 18 buildings totaling 224,732 square feet on 12.5 acres.

The unit mix is 72 one-bedroom apartments, 118 two-bedroom and 50 three-bedroom ranging in six from 730 square feet for one-bedroom units to 1,200 square feet for three-bedroom units. All units are equipped with a washer and dryer.

The gated complex includes a tennis court and two pools, according to vizzda. IPA also noted that all units have either a balcony or patio and some have woodburning fireplaces. The sale price represented a unit price of $291,729 and a square foot price of $311.55, vizzda said.

The sale history of the complex shows it has changed owners four times since 2012, when it sold for $30.9 million.

LaSalle Investment Management’s parent company, Jones Lang LaSalle “traces its origins to 1783, when auctioneer Richard Winstanley set up shop in London,” the company’s website states, adding that his son 23 years later renamed the firm Jones Lang Wooton & Sons and began expanding internationally after World War II.

“As JLW continued to grow, LaSalle Partners was doing the same, moving from humble beginnings as a small real estate firm in Texas to become a globally recognized real estate investment manager. In 1999, the two firms would join forces to become Jones Lang LaSalle,” the website states.

The company was named to the Fortune 500 in 2015 with gross revenues of over $5.4 billion.

LaSalle Investment Management last year earned the WELL Health-Safety Rating for 193 office and multifamily properties in North America and Asia Pacific through the International WELL Building Institute.

“The WELL Health-Safety Rating is an evidence-based, third-party verified rating focusing on operational policies, maintenance protocols and emergency plans to promote overall occupant health and ensure emergency preparedness,” it states.

Properties earn that certification by demonstrating improved air and water quality management, health service resources, emergency preparedness programs, enhanced cleaning and sanitation procedures and “stakeholder engagement and communication.”

“The WELL Health-Safety Rating can instill confidence in those who come through the building as well as the broader community,” LaSalle says.

David DeVos, LaSalle Global head of sustainability, adds: “Tenants are prioritizing healthy spaces where they feel safe, so it is critical to exemplify our commitment to safety to drive tenant demand and, ultimately, portfolio performance.”

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