Apartment building sales boost Capitol Riverfront development

May 20, 2012

Washington’s emerging waterfront continues to attract interest for the already hot apartment and condominium market, with investors making acquisitions and developers snapping up sites in the Capitol Riverfront area near Nationals Park.

Most recently, JP Morgan Asset Management acquired two apartment buildings at 100 Eye St. SE and 909 New Jersey Ave. SE, on behalf of institutional investor clients. The two-building apartment property, known respectively as Axiom at Capitol Yards and 909 at Capitol Yards, includes a total of 483 units and sold for a combined price of more than $188 million. The sellers were entities affiliated with Dallas-based JPI Multifamily Partners.

At approximately $392,000 a unit, the luxury apartments sold for more than twice the market average of $155,000 a unit for apartment property sales in the Washington region during the first quarter.

The same investors have plans to buy the third property in the portfolio, having placed the much-larger 448-unit Jefferson at Capitol Yards, located at 70 Eye St. SE, under contract. All three of the Capitol Yards apartment buildings include high-end amenities such as fitness centers, lounges and rooftop pools.

Also in April, Toll Bros., a luxury home builder, purchased a 1.2-acre lot for $24 million, or $481 a square foot. Though no set plans have been filed for development, the site will likely see apartment or condo units. The lot is located at 1025 First St. SE, within two blocks of the three Capitol Yards buildings being acquired by JP Morgan.

According to brokers, these types of properties appeal to those who could afford to own a residence but instead prefer to rent in a location that offers a “Live-Work-Play” urban lifestyle planners envisioned for the area, which has undergone a transformation since the Washington Nationals baseball stadium opened. The influx of residents is also beginning to attract retailers. Harris Teeter and Austin Grill are among retailers that recently signed leases for locations in the area.

These recent sales, along with the five proposed or under-construction multifamily projects in the area, help support a growing trend in the Capitol Riverfront area.

Kirstie Boatright is a research manager for CoStar Group in Washington.

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