Repositioning Underway for Recently Traded Sawgrass Cove in Florida

In their first joint venture, Atlas Real Estate Partners and Andover Real Estate Partners have wrapped up the $23.3 million purchase of Sawgrass Cove Apartments from Equity Residential. Now the partners have tapped multifamily management provider Greystar to oversee the 336-residence property.

Bradenton, Fla.—In their first joint venture endeavor, Atlas Real Estate Partners and Andover Real Estate Partners LLC have wrapped up the $23.3 million purchase of Bradenton, Fla.’s Sawgrass Cove Apartments from Equity Residential. Now, gearing up to add a little more luster to the local apartment market, the partners have tapped multifamily management provider Greystar to oversee the 336-residence property, which is presently being repositioned.

Sawgrass Cove, formerly owned by Equity Residential, first opened its doors at 4801 47th Avenue West in 1991. The property sits on a 28-acre parcel with a lake roughly 10 miles south of Sarasota in Manatee County. Atlas and Andover’s renovation plan for the apartment community includes the upgrading of units, as well as the amenities package, which now includes a new on-site fitness facility and dog park.

While Atlas and Andover are eager to take Sawgrass Cove to a new level, the property is already high on renters’ list; at the time of its change of ownership the community was approximately 97 percent leased. It’s a sign of the times.

“Sarasota-Bradenton is a secondary market, and it has come through the recovery, which we refer to as the post-condo conversion reversion frenzy,” Michael Slater, owner and president of Triad Research & Consulting Inc., tells MHN. “New construction has taken its time to get back on board, but now it is starting to because, of course, the rental market is doing so well that demand for rental housing has increased significantly.”

Driving that demand is a bevy of factors. “Obviously with the single-family market declining, with credit being damaged and underemployment, people who were paying a great deal more for housing are now limited to paying for high-quality rentals,” he notes. “The mortgage industry was only designed to absorb a 4 percent to 5 percent failure rate, but in the last three years, you’re seeing 30 percent to 45 percent and people are having to either died-in-lieu, short sale or abandon their homes. They’re losing credit, they’re losing cash or equity, so buying homes is not the way that most people are shifting their housing choice.”

And with little new construction having come online within the last few years, that loud call for apartments is only going to grow louder. “The reality is that the first new project to be built in over six years is being built right now in Lakewood Ranch, but in the next 12 to 24 months, there will probably be another three or four.” The apartment demand/supply ratio, or job growth/units delivered ratio, is expected to be -6.1 percent for 2011, as per numbers from apartment market research provider Axiometrics Inc.

Not only are developers beginning to gear up to provide new accommodations, owners are capitalizing on the increased value of their apartment assets that has come hand-in-hand with increased rental demand. “Of the last projects built, one was built in 2005 by Bainbridge Co. and they just sold their property earlier this year at $110,000 a door and have maintained high occupancy and raised rents in six months,” Slater notes. “And the other one is in downtown Bradenton and it sold for about $95,000 a door and they, too, have improved occupancy to higher than 95 percent and raised rents.”

The average occupancy rate in the Sarasota-Bradenton MSA, according to Slater, is north of 95 percent. Indeed, Axiometrics forecasts that the market will record a fourth quarter occupancy rate of 95.1 percent. “I can say that the market is stable and improving. I can say that there’s not a lot in the pipeline, and that the market will continue to maintain strength for the next several years,” says Slater.