The list of aging apartments along Six Forks Road continues to dwindle as apartment developers comb that area of the city for redevelopment opportunities.
In 2012, Kane Realty tore down the Lantern Square apartments to make room for Allister North Hills, a 434-unit complex just south of the Beltline on Ramblewood Drive.
And last week, White Point Partners completed demolition of a collection of 60 one- and two-story apartments at the intersection of Six Forks Road and Anderson Drive. The Charlotte-based firm plans to replace the late 1960s units with 182 higher-end units that will be in four-story buildings and feature elevators.
The complex, to be called Anderson Heights, is one of several new apartment communities in and around North Hills that are scheduled to be completed in the next 18 months.
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Jones Grant, a 243-unit complex on Wake Forest Road just a half-mile from Anderson Heights, has begun leasing units. And Kane Realty is set to break ground on a 171-unit complex that is expected to open next year.
Those projects don’t concern White Point, which believes the location and size of Anderson Heights will make it attractive to renters who today have a dizzying number of options.
“Certainly, there’s a lot of supply in a few pockets but overall I think there’s pretty good demand for higher-end apartments,” said Ryan Hanks, a White Point partner.
White Point is also confident because Anderson Heights, which is being built on a 5-acre site, doesn’t include structured parking. (Neither does Jones Grant.) That means the development costs for the $27.5 million project are lower and White Point can be more flexible in the rents it is able to charge while still delivering returns for its investors.
“It gives us a lot less pressure to perform on rents just because our costs are that much lower,” Hanks said.
Anderson Heights follows a strategy that White Point has successfully executed in several other markets in the Southeast. The firm identifies attractive infill sites, buys the property and gets the necessary entitlements, and then tears down the existing buildings.
The strategy carries risk, since most times such projects face opposition from neighbors during the rezoning process.
In 2012, White Point paid $3.35 million for a 3-acre site in Durham just across the Durham Freeway from Duke’s East Campus. White Point sold the site to Faison 10 months later for $5.475 million, according to property records. Faison has since built 300 Swift, a 202-unit apartment complex, on the site.
White Point began looking at the Six Forks site two years ago. Hanks said neighbors were supportive of the firm’s plans, in part because many considered the older apartment complex to be an eyesore. The firm paid $4.57 million for the property, according to property records.
Construction of Anderson Heights is expected to begin next month and take about a year. White Point doesn’t have any plans to sell the complex, although it may get offers. Hanks said he’s still kicking himself over White Point’s decision to sell the 300 Swift site to Faison instead of developing it.
Before joining White Point, Hanks was the chief investment officer for Trade Street Residential, a publicly traded real estate investment trust that focuses on suburban apartments.
Hanks said Trade Street was among the first to execute an acquisition strategy in the Triangle that has become increasing popular here: Buying apartments once the developer has completed construction, but before the complex has stabilized.
The remarkable thing about such transactions in the Triangle is the recent prices that investors have been willing to pay.
“They’ve paid market price for basically an empty building. It’s a crazy market,” Hanks said. “A lot of dollars want to be in the Triangle. I think that’s why so many people like us are bullish on that market. From an institutional level, people really like to invest dollars there.”
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