American Real Estate Partners Plans Virginia Apartment Conversion – Multifamily Real Estate News
A seven-story, 200,000 square foot office condominium at 1101 King St. in Alexandria, Virginia was acquired by American real estate partners and will be redeveloped into a mixed-use building with approximately 200 apartments and 17,500 square feet of retail space.
This investment was the fifth made through AREP’s Strategic Opportunity Fund III, which is now 60% deployed. In June, AREP announced the closing of the fund with $63 million in equity commitments, expanding the diversity of public and private institutional investors and family offices. Fund III co-investment capital aims to invest in $1.5 billion to $2 billion in asset value, using moderate leverage.
The acquisition included the simultaneous purchase of all condominium units in the office building from seven owners. The total purchase price and estimated cost of the redevelopment were not disclosed.
cooper carry lead the design team for the residential hospitality redevelopment and design project RD Jones will take care of the interiors. Construction is expected to begin in July 2023. An estimated completion date has not been announced. AREP will maintain commercial leases for the ground floors, including OrangeTheory Fitness and Paris Baguette, throughout the construction process.
Doug Fleit, co-founder and CEO of AREP, said in a prepared statement that the asset, located in the heart of Old Town Alexandria and the bustling King Street retail and restaurant corridor, is a example of AREP’s strategy of seeking special properties in dynamic neighborhoods. and emerging locations that can be repurposed for residential use.
Brian Katz, co-founder and president of AREP, said in prepared remarks that the office-to-multifamily conversion acquisition is one of the company’s key investment strategies and builds the company’s capacity identify strong investments in diversified product types and markets to create value.
Commercial conversions to residences are a growing trend across the country. More than 20,000 units in older buildings that previously served other purposes were completed last year. It nearly doubles the number of conversions made in 2019 and 2020 combined, according to RentCafe. In one of the most recent examples, the Vanbarton Group secured $272.5 million in construction financing for the company to convert 160 Water St., a 24-story office building in Manhattan’s Financial District. into a 30-story residential building with 588 units at market rate.
Property Details
The King Street office building was built in 1985 and renovated in 2017. Fleit noted that the asset rises four stories above surrounding buildings with city views. He said the balconies on each level are more like terraces, with many 10 to 20 feet deep. Once the redevelopment is complete, the property will have a club room, fitness center, rooftop social terrace with Old Town views, and concierge services. With the post-Covid shift to flexible working hours, AREP will include shared hybrid workspaces in the building. The redesigned 1101 King St. will feature larger than average units that allow for indoor and outdoor living, incorporating terraces and home-working spaces.
Access to waterfront park shows and activities is a short walk from the property. The old town has more than 200 shops and restaurants as well as museums. The King Street subway station is a 10-minute walk from the building and three stops from Amazon HQ2 at National Landing in Arlington. Alexandria is approximately 8 miles south of Washington, D.C. Residents of 1101 King St. will also have easy access to Interstates 495 and 395, and Routes 7 and 1. Reagan National Airport is 5 miles by car or a few minutes by metro.
