Dive Brief:
- A one-year-old, 110-unit apartment building owned by New York City-based Ranger Properties in Washington D.C.'s Union Market neighborhood is going into foreclosure, according to Bisnow.
- Srinivas Chavali, who bought The Lanes at Union Market’s note from lender Eagle Capital in January, will take the property to auction on May 23 at Alex Cooper Auctioneers. The $33.7 million construction loan, made by Eagle in 2019, increased to $39.5 million in 2020 and came due in 2023, according to Bisnow.
- The apartments at The Lanes at Union Market were 89% leased as of March 31, though a 2,327-square-foot, first-floor commercial unit sat vacant, according to the Alex Cooper listing. A UPS store occupies another 1,134-square-foot commercial unit under a 10-year lease that it signed on Nov. 16, 2022. The property generated $1 million of net operating income for the six-month period ending March 31, 2024.
Dive Insight:
Ranger Properties purchased the land for The Lanes at Union Market in 2017 but wasn’t able to start construction until 2020, Chavali told Bisnow. Ranger didn’t reply to Multifamily Dive’s request for comment.
The project included 50 one-bedroom, one-bathroom units and 60 two-bedroom, two-bathroom units, ranging in size from 534 to 945 square feet. As of March 31, 103 apartments were leased, and gross monthly rentals generated approximately $268,000, according to the listing.
The units include stainless steel appliances, white cabinetry, white quartz countertops, vinyl hardwood plank flooring and walk-in closets, according to the listing. The property’s amenities include a fitness room, game room, multi-use room, lounge and a roof terrace.
The property sits near Union Market, which has a diverse array of shops, boutiques and vendors, in one of the most active submarkets for development in the nation’s capital. While other cities like Houston and San Francisco are seeing apartment foreclosures increase, the Washington, D.C., market has been fairly insulated.
“This is one of the first ones that I've seen in the region,” William Rich, president of Delta Associates, an Alexandria, Virginia-based research firm that covers the mid-Atlantic region, told Multifamily Dive. “There have been some in other cities, but that hasn't really happened here, especially for an asset that just delivered within the past couple of years.”
High-supply submarket
If there were an area of Washington, D.C., where a developer could run into trouble, the submarket, including Union Market seems like a likely place.
Over the past two years, over 3,300 units have been delivered in the area, with another 3,000 units expected to come online over the next three years, according to Rich.
“It’s quite an active marketplace,” Rich said. “So there’s a lot of competition for renters in that part of the city.”
Rent growth sits at around 0.6% in the submarket, which is below the citywide average of 1%, according to Rich. However, 2,800 were absorbed in the past 12 months.
“The concessions seem to be working,” Rich said. “That market leads the city and the metro area in absorption and has for the past couple of years.”
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