Gordon Grubb is eyeing yet another inside-the-Beltline redevelopment play. The Raleigh developer and a group of partners paid $9.5 million for the 42-year-old Palms Apartments at Lake Boone Trail and Interstate 440 in West Raleigh.

The sale closed late last week. And Grubb, who is president of Grubb Ventures, says he plans to continue operating Palms' 212 units as rentals. But it's safe to assume he has bigger plans for the 39-acre property. Eventually.

Grubb has specialized in snatching older properties in thriving Raleigh neighborhoods and turning them into something grander.

A decade ago, he took aim at a smattering of old offices, which eventually made way for the 91-unit Gardens on Glenwood luxury condominiums, at Glenwood Avenue and Oberlin Road.

Soon after, he bought a 10-building office park inside Interstate 440 on Glenwood. He tore down one building to make way for the bigger 3700 Glenwood North office building, which opened last year.

Recently Grubb has focused on older apartment complexes.

In 2005, he bought the 1950s-era Whitaker Park apartments near the city's Five Points neighborhood. He tore it down and planned The Oaks at Fallon Park, where $800,000 homes are being sold.

In 2006, he paid $24 million for Country Club Homes, an apartment complex at Fairview and Oberlin roads, in the fancy Hayes Barton neighborhood. Grubb has considered redeveloping the 24 acres into a retirement community.

He also has a contract to buy 6 acres at Wade and Glenwood avenues from the N.C. Conference of the United Methodist Church. An office building and the 51-unit Raleigh Towne Apartments, both built in the 1960s, stand there today.

Then there's the Palms. Grubb says he'll evaluate redevelopment plans for the property in three to five years.

He has little choice but to wait. As the economy slows, lenders have become wary of financing new construction projects.

When it comes to Palms, which is near a growing core of offices in West Raleigh and Cary, things are looking up for the investor. Occupancy has risen three points to 93 percent since 2006, while average monthly rents have climbed 5.4 percent to $681 per unit, data from the Triangle Apartment Association show. Grubb expects demand to grow as renters gravitate closer to employment centers to reduce commuting costs. "It doesn't make a whole lot of sense," he says, "to be knocking down income-producing properties."

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The same demand that lured Grubb to Lake Boone no doubt attracted Meredith Partners to a 297-unit complex across the street from Palms.

Meredith, a Jupiter, Fla., investment group, paid $18.9 million for the 40-year-old Meredith Village Apartments.

The price, almost $64,000 per unit, was about 35 percent more than what the Newport News, Va.-based seller KF Meredith paid in 2001. It also was 24 percent above the recently assessed county tax value. Occupancy at Meredith has fallen eight points to 90 percent since 2006. But average monthly rents have climbed 6 percent to $698 per unit.

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Phillips Development & Realty of Tampa, Fla., is nearing construction of its $20 million, 196-unit Phillips Swift Creek apartments near the intersection of Old Apex Road and West Chatham Street in Cary. Construction is to begin by October.

Cary's Town Council recently raised multifamily development impact fees -- a move that is expected to slow apartment development. But Phillips is grandfathered into the previous fee structure, giving it a competitive edge against future developers.

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